Technology has integrated itself into every aspect of our daily lives, and it has only become more apparent this year under the pandemic lockdowns. We Zoom with our friends, share family news on Facebook Live and communicate with clients on LinkedIn. As an industry, wealth management has fully adopted technology to keep businesses running and clients happy. But not all technology is created equal.
Wealth management firms that have invested in technology have seen their efforts pay off. Financial advisors and their clients are happy. But those that have failed, or fallen short of expectations, have seen their frustrated financial advisors looking to take their business elsewhere.
I know I am one to harp on the need for technology. Even before “fintech” was a phrase, I have advocated for the wealth management industry to pick up its pace and embrace technology to better serve investors. But it’s not just my observations that are demonstrating how necessary new technology is — the data backs it up too.
In August, Broadridge Financial Solutions BR +1.3%, a global fintech company, found that 77 percent of financial advisors interviewed in the US and Canada reported losing business as a result of not having the right technology to interact with their clients. Those that lost business said on average they lost a fifth from their book.
The advisors are frustrated, and they know that better technology could save their business. About half, or 51%, of North American financial advisors often think about leaving their wealth firm in search of better technology.
The dissatisfaction in firm technology was particularly apparent in Canada versus the U.S. Only 17 percent of Canadian advisors are very satisfied with the tools they are provided to interact with clients and prospects over social media. U.S. financial advisors are more satisfied, and use social media to a larger degree. U.S. advisors are also more likely to customize client communication.
Those numbers should be a reality check for wealth management firms— they need to pay more attention to technology and the needs of their financial advisors. A frustrated advisor is not going to last long at an unresponsive firm. Fortunately, that is not a hard fix. Here are some steps firms can take to keep their advisors and clients, happy.
How to make technology work for your company:
1. Update your technology. Your staff likely took stock of your company’s technology and resources when they began working from home. Think about where the gaps were and what limits staff faced. Hopefully you realized that paperwork wasn’t all that necessary, but in exchange, up-to-date software and firm provided tools should have become more needed. Pay special attention to younger advisors. Broadridge found that those under the age of 40 are more likely to leave their firms. These advisors are the future of the business, and it is important to keep them engaged. They may be more sensitive to the need for updated technology and tools, and their foresight could benefit your entire business.
2. Make a communication plan. Think about how and when advisors communicate with clients, and ask them what their preferences are for communication. This may mean a balance of emails, phone calls, website updates and social media posts to create daily communication through different channels. Encourage a personalized approach, and support advisors with the appropriate resources and tools. There is likely to be stark differences between the generations. More than half of millennial financial advisors say that they communicate with their clients daily, but 62 percent of baby boomer advisors communicate monthly or less. Look into these differences, why they exist and how they should change. Create best practices for your firm, and make sure each advisor is equipped with the tools need to work with those practices.
3. If it’s not working, change it. Financial advisors reported to Broadridge a range of satisfaction with the tools that their companies have provided them. Nearly three-fourths of advisors wish their firm had access to better technology tools. If your advisors are feeling let down by your firm’s technology, so are their clients. Talk with advisors and see what tools are still needed to make their work more effective and efficient. Why is the technology that they have not working? This may involve changes to procedures as well. Some 82 percent of advisors said that paperwork detracts from time spent working with clients. Has your firm streamlined its practices to cut down on these inefficiencies?
4. Make technology a priority. In times like these, it can be difficult to prioritize spending and shifts in business strategy. But investing in technology and having a clear plan for keeping your technology cutting edge will pay off in the long run. If you fall behind now, it’s going to be harder to catch up later. Engage with your advisors to come up with a short and long term plan for your company. See what changes can be made immediately, and what you need to look for in the future. Making technology a priority is not a one and done move. This should involve a mindset change and regular conversations going forward.
Our reliance on technology is undeniable. As we discuss the post-COVID world and the new reality of our work lives, technology needs to be at the forefront of conversations. Don’t settle for old practices just because they worked so well for years. We’re looking at the next generation of wealth management, and if your business wants to survive, adaptation is necessary.
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