There have been more advances in technology for independent advisors in the past decade than there were in the previous 30 years. And the speed of this change is accelerating even faster today, giving advisors more tools to provide even better service to an even larger group of clients.
This change is across the board, from back office and administrative functionality to investment and portfolio management platforms to client-facing portals and tools.
But it's not all fun and games.
Independent advisors now have to engage with technology in regards to reporting, trading, market research, analysis, implementation and data, while wireless networks, mobile devices and cloud computing have transformed the way advisors do business with clients.
Advisors can access much of this technology via outsourcing - and this isn't just technology for its own sake; as it improves, so too does practice management, and an advisor's competitive edge.
Unlike large firms and wirehouses with their legacy systems and snail's-pace updating, independent advisors are in an ideal position to harness and leverage ever-evolving technology. In fact, advisors new to the independent space often experience a mild techno-shock: It is far more advanced and integrated than what they are used to, and can make them better advisors.
Imagine an advisor who can access all of a client's data from any place at any time, and consolidate client assets into a single picture in a seamless, integrated fashion to provide consolidated reports, financial plans, custody reporting and universal rebalancing - even when those assets are held at a variety of different custodians. Or explore scenario planning on the spot, allowing the adjustment of goals, spending priorities, assets or other information and showing the results in real time.
Even portfolio management is no longer about trading individual positions or just those positions held at one custodian; now everything is scalable and automated allowing trading, execution and reporting to happen together.
Technology also plays a significant role in client retention and acquisition, and drives significant efficiencies in advisor practices. This creates better margins, allowing advisors to operate at a much higher level - without adding staff - and opening up more time to spend with clients - quality time. In client meetings everything from statements to confirmations, scanned images of documents or financial plans can easily be opened up using a mobile device or tablet so client questions can be answered immediately without ever needing to print hard copies.
With the advent of cloud-based services and digital devices, independent advisors can access complete client information and other content from anywhere without actually downloading the content and storing it on the device - a huge security advantage.
With the right technology, an advisor can:
· Present an HNW client a sophisticated portfolio model on an iPad over lunch.
· Share the latest research on a new company from a half of dozen sources.
· Demonstrate the impact of a new asset allocation strategy on a client portfolio in real time from 3000 miles away.
· Rebalance all or a select group of client accounts at one time.
· Trade simultaneously for multiple clients on a single security.
The reality is that the way we communicate with clients is evolving. Clients have embraced technology wholesale, and for them on-the-fly communications is a given. They want to access more information electronically, with increasing demands on how often and what format that information is delivered.
While most independent advisors don't want to be on-call 24/7, clients do expect responsive service, and technology enables them to be much more independent, flexible and responsive, providing quick feedback and the ability to scan secure emails anytime in order to better manage client needs and/or emergencies and to provide information through client portals.
HNW and UNHW clients especially want high-tech with their high-touch service. They expect their advisors to be able to keep up with them and be online to give them data that is current.
Instead of stapled, hard copy monthly statements, they are more likely to prefer a secure on-line statement they can access daily on a tablet - a consolidated statement with all of their assets and activity in one place. Technology allows total integration - custody assets and trading activity as well as illiquid and alternative assets which can include everything from horses to hedge funds to private planes.
The bottom line is that enhanced technology is integral to the successful business practice of independent advisors, and it is critical that they stay on top of the changes. Those advisors than can aggregate information and implement technology effectively are much more likely to be the client's trusted primary source of information.
Technology developments let independent advisors focus on providing high-quality advice and service to many more clients than they could in the past, delivering very customized solutions in a scalable and efficient way. That is a significant change from ten years ago. ? ?
Technology also helps create a community for independent advisors with their peers through on-line networks and portals to share best practices.
Considering that the largest transfer of wealth ever is expected to change hands as baby boomers leave their assets to their offspring, it's important for clients and prospects, most notably the young, tech-savvy beneficiaries of older clients, to know that an independent advisor is ready to tackle change head on.
Embracing the latest technology shows clients that an independent advisor is forward thinking, ready to seize new ideas and adapt to stay ahead. It's all possible, and it's all happening right now.
Shirl Penney founded Dynasty Financial Partners and is its president and CEO. He is formerly director of business development for global wealth advisory services at Citi Smith Barney and previously was head of executive financial services and director of private wealth management at Smith Barney.