Each day, technology continues its steady advance on a traditional advisor’s world. These advisors seem to be threatened on every side.

Don't take my word for it. According to a recent study by Scottrade Advisor Services, 90% of respondents believe robo-advice will impact the wealth management industry, citing things like fewer prospective clients to compressed fees and new client interaction models. In addition, these same advisors think 60% of Gen Y is very likely to use robo-advisory services. 

To address the challenges of an increasingly digital advisory space, new software aimed at helping advisors automate and get online is coming into the market. (Full disclosure: I am the founder and CEO of Wealthminder.com, a provider of financial planning and investment advice software.)

But, of course, businesses of all sizes have budgets -- and smaller firms may have even tighter limitations. So, how do you survive (and even thrive) in this new era? 

1. Focus on areas of your practice where you can gain the most efficiency by using technology. 

Here are a few ideas to get you started:

  • Collect data from your customers through an online portal.
  • Automate the account opening and asset transfer process.
  • Let software do the heavy-lifting for the initial portfolio review (including held-away assets).
  • Use alerts to notify you of problems or opportunities instead of logging into accounts one by one. 
  • Have your technology follow-up with clients on the recommendations you make to them.

2. Use software that enables clients to interact with you on their terms. 

Give your clients tools to enter and review information when and how they wish. Let them communicate with you through e-mail, video conferencing, text and other electronic means. Be available to them electronically outside of traditional “office hours.”

3. Provide an online user experience that meets your client’s expectations. 

There’s a reason Apple is the most valuable company on the planet; the user experience of their products is second to none. Simply having the capabilities online isn’t enough.

4. Carefully consider how you select your technology vendors.

Pick a vendor who understands technology. Domain expertise is important, but understanding technology will enable them to apply lessons already learned in other industries.

Consider using software as a service (SaaS) products to reduce your internal IT support costs and to get the latest and greatest innovations immediately.

Look for entrepreneurial / budget-friendly business models such as flat fee pricing per customer. This way you only pay once you get paid, and you only pay for what you use, thus greatly reducing your downside risk.

Times are changing, but the change doesn’t have to be a negative. For forward thinking advisors, online advice represents an opportunity to expand their services to the 100 million households they can’t / don’t serve today because of insufficient assets to make a traditional relationship work.

Rich Ellinger is founder and CEO of Wealthminder.com, a provider of financial planning and investment advice software.

Read more:

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access