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It’s almost 2018, and your clients are starting to wonder why their personal finances aren’t as easily accessible as an Uber car or a shoutout to Alexa. The latest innovations in mobile, artificial intelligence and microinvesting are right around the corner, and getting ready to leap from the periphery to the heart of advisor practices next year.
Wealth management firms of all sizes are trying to streamline their operations to benefit clients, and mobile is a prime example, according to the recent Financial Planning Tech Survey. Forty percent of respondents cited mobile apps as a potential difference maker for the industry.
On the other hand, smaller firms are particularly focused on ways to enhance the human element and provide smarter, better and more sophisticated advice, the analysis shows.
So which technologies offer the most promise to advisors, and which could fall by the wayside?
While robo advice is stealing the headlines, many advisors just aren't focused on the mass-market business, for which, the tools are designed. Only 18% of advisors at all size firms say they’ve adopted a robo solution.
However, firms are reporting tech success in other areas. Risk-profiling software was cited as one such example. The tool “changed the way we talk to clients about risk, and enabled better conversations,” says an advisor at an RIA firm, one of roughly 1,000 participants in the survey.
What other trends have the most power to be transformative? Here are our predictions for the trends and tools that will have a significant impact on the industry over the next few years.
Watch for more financial planning practices to migrate to mobile. Advisors able to deliver a slick and consistent experience on an app will have an edge over those who cannot. Advisors may also ncreasingly find themselves communicating with clients via text messages. Response rates are much higher when you use text as opposed to email — just make sure your texts are fully compliant.
“Alexa! Bill my clients.” Only a few years ago, artificial intelligence was still in the realm of science fiction. No more. Now even the most established RIAs are beginning to see how virtual assistants and machine learning can be built into their back-office operations. Banks are also experimenting with virtual assistants to automate tasks and aid service reps on calls with clients.
Tech companies including Amazon are providing tools at an enterprise level, and there will be a trickle-down effect. Expect to see a growth of new virtual tools for advisors to help with paperwork, scheduling and even client interaction.
Don’t worry, though, about AI-driven client-facing support; It will still be some time before a bot can answer complex advice problems.
Tech tool providers have long touted the ways that they streamline the financial planning business, but serving up thoughtful portfolio strategy recommendations still takes time: first, submit a request for an analyst, then wait for a report back.
Fund companies eager to develop themselves as advisor service providers are now offering platforms with alternative strategies that are accessible in a couple of clicks.
This service is not a substitute for speaking with an analyst, but the option drastically reduces the time that it takes to have a report in hand.
When is a big financial planning software firm also a white-label hybrid platform provider? Or a giant asset manager a source of tech tools for independent advisors?
That time has come: technology providers of all stripes are wandering into the RIA sandbox, sensing the market opportunity to serve the breakaway advisor movement. Look for greater experimentation in offerings, which means advisors will increasingly be pitched all-in-one platform solutions.
It could also mean that independent brand you’ve been utilizing for years will suddenly get swallowed by the corporation you avoided because you weren’t sure about the level of personalized service.
If 2017 was the year the big wealth management firms claimed asset dominance in the digital advice space, 2018 will be the year that firms of all sizes equip themselves with platforms allowing for centralized service of clients across the country.
It’s also worth watching how the biggest firms nurture CFP talent to staff ever-growing call centers. Not only will such developments provide an aging industry a shot of youth, it will also present RIAs with opportunities to recruit young CFPs with a deeper background of practical experience — and at very reasonable salaries to boot.
If you haven’t been paying attention to the microinvesting apps Acorns and Stash, you should start in 2018.
Bigger firms may talk a good game about attracting young investors, but it’s microinvesting tools such as these that have made real inroads into the millennial market.
Stash, for instance, has more than 1 million subscribers and is growing at a rate of 25,000 subscribers a month, the firm says. Of course, the assets aren’t there yet, but these firms are aggressively working to ensure their young clients grow into wealth and stay with them.
These apps are also coming up with new methods to serve clients, offering such features as banking and student loan debt management. They may be onto something.