Traditional full-service wealth management firms that are too slow in adopting digital tools for their clients may be at risk of losing them.

"If you're going to use the information that your client is providing, you need big data tools to grab that information and find out what the best options are for the client, and how to feed them that intelligence," says Aite Group senior analyst Sophie Schmitt.

In what appears to be the latest move to do just that, Northwestern Mutual, No.7 on the FP 50 annual ranking of the nation's biggest independent broker-dealers, just scooped up online planning firm LearnVest.

Northwestern CEO John Schlifske says the 158-year-old insurer will use LearnVest’s software to develop a new financial planning platform for its 16,000 agents and 4.2 million clients. LearnVest has about 10,000 paying customers and another 25,000 clients who have access through employer-based retirement plans.


In related moves, Charles Schwab, Vanguard and Fidelity have all developed plans to beef up their digital offerings.

In February Fidelity announced plans to acquire wealth planning software firm eMoney Advisor. The acquisition was a move to help Fidelity in its goal of finding a comprehensive data management solution, the firm said.

“We’ve been very good at providing tools for advisors, but we hadn’t seen a lot of technology that gets clients engaged in big decisions,” Ed O’Brien, the head of platform technology at Fidelity Institutional, says of the acquisition. In his view, “eMoney is incredibly strong in empowering advisors to make decisions, but it also engages investors in the process of working with their advisors to make those important financial decisions.”

Last week, Schwab unveiled the details of its much-anticipated robo platform for RIAs, two weeks after rolling out a digital investment management service for consumers.

Meanwhile, Vanguard's new digital financial advisory unit, Personal Advisor Services, is still in its pilot phase, but growing fast. Vanguard says the unit's assets rose from $755 million in 2013 to $10.1 billion at the end of last year.


"With the retiring of the core baby boomer client base, wealth management firms are going to be fine for the next two or three decades," says Schmitt, who spoke two days before the deal was announced. "After that, they are going to have to replace those assets."

And it's not just millennials that want a tech-savvy advisor. High-net-worth clients are also looking for access to their information online and, more specifically, through tablet devices, according to a new Aite Group report.

In order to meet the needs of both young and affluent clients, wealth management firms should consider integrating advice tools that advisors can use with clients as well as for prospecting, the report suggests.

But according to Schmitt, many advisors feel threatened by the very same client-facing digital tools and services that will likely help save their businesses in coming years.


An estimated 55% of advisors said they already offer clients content through their websites, but a 2014 Aite Group survey of more than 400 financial advisors suggests that portion will be much higher, spreading to roughly 70% to 80% of firms within just a few years.

Yet it's not just about looking digitally savvy. Firms now face the task of providing more robust self-servicing tools like account aggregation and light planning, according to the report, which includes data from numerous surveys since 2013.

"There's a lot more than just putting together these pretty websites," Schmitt warns.

More than half of providers plan to roll out marketing campaigns geared towards younger clients while over 40% plan to increase online marketing and social media marketing, according to a 2014 Aite survey of 402 financial advisors.

Roughly 43% of respondents said they plan to deliver more self-servicing tools and less "advisor-delivered" services. Around 42% said they even plan to expand the type of advice being offered to a younger audience, shifting towards budgeting or debt management, for example.

The report also recommends that firms develop client portals for data and document sharing as well as communication tools to facilitate video, Web and phone meetings.


But digital integration isn’t always the answer. Beyond developing Web-based tools for their younger or more digitally inclined investors, firms are still expected to do what they do best: advise their clients, says Schmitt.

"They may have their PFM [personal financial management], and that's great, but that’s just a beginning," she says.

"It's about what you do with that tool to actually engage the investor, help them make changes to their finances and give them that actual advice." 

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