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Engaging with clients using data aggregation

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As a longtime investment advisor, I have never walked into my office and thought, “Finding clients is so easy.”

Our industry is competitive, and clients are difficult both to engage and to retain.

A good client stays with his or her advisor for about four years, according to my conversations with custodians, and that isn’t very long.

To get and keep that client takes frequent, active engagement and re-engagement.

As a result, for advisors, marketing is a central problem: How do I get to Jane, get her to trust me, and get her to ask me to manage her money? Making that happen at a reasonable cost is problem number one, and keeping Jane happy is problem number two.

There is always another advisor whispering in the client’s ear, who is going to make you feel like you could be doing better.

To increase retention, advisors need all the help they can get, and that is where technology comes into play.

Traditionally, we think of two ways technology enhances engagement: through 24/7 access and through aggregation of data.

Of the two, the most common vehicle for enhancing client engagement is data aggregation. In practice, that can translate into integrating the firm’s customer relationship management system with its portfolio management function or aggregating multiple accounts into a single report in order to facilitate unified advice.

These types of aggregation work well with traditional forms of client communication.

Say, for example, a client calls with a question about her portfolio. If daily performance data are integrated with the CRM, the advisor has all the information needed at his or her fingertips, from the value of her investments and previous conversations about asset selection, to the name of the client’s new grandson and her plans to start a college account for him.

This instant access to integrated information makes an advisor’s life much more streamlined, once the initial effort to input information is complete.

Equally important is enabling end clients to have 24/7 access to their portfolio data. This is old as the hills — day traders could check their online portfolios back in the 90s — but new again, as more people turn to digital advisors and client portals.

What’s more, with increased processing power ubiquitous, innovative ways to aggregate data have emerged and with them, new intelligence.

At this point, big data is new enough that it is hard to tell what is real and what is vaporware. But soon enough, analytics will help advisors figure out who needs extra attention, who may be able to provide a new referral and more.

Social media listening promises to help identify moments of opportunity.

Say Harry, a longtime client, announces the birth of a grandchild on social media. Now you can say, “hey, congratulations, want to set up a college account”

Instead of a client calling the advisor, the advisor can call the client and be proactive. Little Bob is going to college, Julie is getting married, etc.

Today, only early adopters are using this strategy. You have to balance being on the cutting edge with being a “creepy” client stalker.

Several software providers enable you to set up ongoing keyword searches that will help you track people announcing a child, grandchild, new job or even a divorce.

To succeed with a social approach be diligent about collecting the flows. Announcements are made, then buried in the stream, so listen daily.

Ten years from now, it is likely that we will all be doing this, at least if one is to believe the predictions by IBM and Schwab Institutional.

Social listening will change the industry but only marginally.

Maybe a widget will get into my dashboard and suggest action that goes straight into my calendar. That will make marketing operations easier and client acquisition and retention more competitive.

Once these tools are universal, it may become more difficult to find money in motion from unsatisfied clients. The early adopters will benefit for a few years, then it is game over.

Advisors meet tons of people; it is part of our job.

The difficult thing is to create a system that lets us harness the power of these relationships. It is hard to talk to Joe about a portfolio idea at the kids’ soccer game, but you can email prospects and track responses.

Attracting younger clients requires a different playbook than the one used for the baby boomers who make up the majority of today’s clients. They are native to online communications and can play with data.

But you have to hit them at the right time. Joe at age 22 doesn’t even know how to compare portfolios.

He wants something easy, like a robo advisor.

But by the time he reaches 40, Joe does care. He has more money and less time, and his life is probably more complex. Now Joe wants to think about a more nuanced investing strategy, and he can look at your ideas without disclosing his assets.

I can use a platform such as Emotomy to create a proforma of Joe’s brokerage account and track it against my portfolio and other clients’ portfolios. We want the end investor to feel like he can discover without pressure, see what people are doing.

Prospects don’t need to be data scientists, but for these tools to work, they do need to be interested in their money, to understand that financial planning is more like going to the doctor than going to the car mechanic. Clients attracted by these tools tend to be attuned to their investments, to be involved and to take care.

They are not looking for a simplistic solution. This helps advisors attract qualified prospects who appreciate their value and are willing to pay for it.

Advisors who are looking to expand their outreach and make their marketing more efficient, in addition to investing in Google Adwords and sponsored Facebook posts, it is helpful to look within the office and see how to improve communication through the tools you already have.

Creative uses of data aggregation and social listening should be accessible. If they are not, it may be time to start looking for some new tools.

This story is part of a 30-30 series on how technology is changing your practice. It was originally published on Aug. 23.

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