Tech is an ally, not a threat
E*TRADE Advisor Services
Advisors may think of their business as being “people-based”—centered around making and maintaining long-term personal relationships—but tech and people are a yin and yang, and advisors must account for both.
Research shows that 67% of investors choose their financial advisor partly for access to advanced investment tools like online investment capabilities and interactive modeling, while more than three-quarters want the ability to review their accounts in real time.1
The message is clear: Client expectations are defined by the mobile, social, and streaming platforms of our day, and these expectations translate to finances—even advisor-led. And as the industry fast-tracks tech adoption, there’s a risk that clients may choose more tech-enabled competitors—or even tech itself over human service.
So how can advisors create a best-in-class tech experience?
Identify what you need
When considering how to build a competitive tech stack that serves your unique needs, start by identifying where an integrated solution could add the most value.
For many advisors, the top must-have is an advanced trading platform, followed closely by an efficient CRM. Think through the different categories of solutions to prioritize, and how deeply you’d need to integrate with your existing business infrastructure:
- Financial planning systems provide a range of advanced modeling tools that can test specific investment scenarios based on a client’s assets, risk tolerance, timeline, and long-term financial goals.
- Customer relationship management (CRM) solutions help track and quantify interactions with clients and prospects.
- Account aggregation software gathers data from various financial institutions and investment companies to provide a holistic view of a client’s total position.
- Portfolio management, rebalancing, and reporting systems manage individual portfolios, maintain asset allocation and risk parameters, and track and displaying portfolio performance.
- Document management systems use cloud-based connections to back up client data while helping advisors share files, manage different document versions and edits, and satisfy compliance documentation requirements.
- Risk-management tools help quantify risk tolerance and enable advisors to use that data to build suitable portfolios, meet client expectations, and win new business.
Make clear choices for your tech stack—and integrate
In a perfect world, various software programs would come out of the box ready to seamlessly communicate with each other, but that’s not always the case. Even so, adapting tech to suit your firm’s needs can be a successful strategy: 60% of firms that used four or more systems experienced 8% higher AUM growth on average, as well as a 10% average increase in their client bases.1
Just make sure to do your due diligence and run through real-world testing scenarios before making a commitment.
Time is money, and tech saves time
One revealing study showed that 86% of clients want their financial advisors personally involved in their investment management, yet more than half feel their advisor wouldn’t even recognize them if they passed on the street.1
Advisors are time poor: Advising clients, investing their money, and providing necessary documentation and compliance paperwork can eat up more than half of weekly staff hours.1 A strong, integrated tech stack can support back-office processes, allowing you to spend more quality time with your clients and prospects without needing to hire additional staff.
Loving the machine
Statistics show that tech-integrated firms earn an additional $100,000 in annual revenue compared to less tech-savvy competitors of similar sizes.1 The key is understanding how tech can augment the strengths of your business, rather than undermine them. Think of it less as a disruptive invasion of human-replacing robo-advisors, and more as a human-empowering expansion of your existing toolkit—a way to solve longstanding pain points, meet customer demand, and position yourself for growth.
Rather than posing an existential threat, tech can help advisors achieve greater efficiency, scale, and deeper client relationships.
A version of this article first appeared in Wealth Management.
- E*TRADE Advisor Services, “Choosing Technology: Full integration is key to advisor success,” 2019.