IFAJul 11 2018

Advisers should harness the power of technology

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Advisers should harness the power of technology

So it is quite startling when you realise that it is only over the past decade that smartphones have become widely used, while social media was also still in its infancy 10 years ago.

Now, we are seemingly dependent on smart phones to perform a whole range of tasks and functions that 10 years ago we did not even know we needed. 

It is clear we are in the midst of a technological revolution every bit as fundamental as the industrial revolution, and with similarly far-reaching potential impacts. Those impacts reach deep into the world of financial services – with advice being a prime example. 

A lot of technology already plays a significant role in supporting the advice process, with most firms now using some form of practice management system, quotation portals, tools and calculators.

Those adviser businesses that choose not to embrace technology will not disappear overnight, but the competition from differentiated technology-driven advice firms will no doubt be fierce.

But this is just the start. We will see much more technology innovation that will deliver transformational efficiency gains for advisers and customers over the next five to 10 years.

Adviser businesses that embrace this technological revolution are likely to be well rewarded.

Truly scalable business operations will be able to deliver high-quality, personalised advice to substantially more consumers at a fraction of the cost.

Those adviser businesses that choose not to embrace technology will not disappear overnight, but the competition from differentiated technology-driven advice firms will no doubt be fierce. 

The challenge of embracing technology can be a daunting one, but it is more comfortable once you break it down into components.

Client communications

There are two main types of technology to be deployed here. One is the client portal, which allows clients to access their own data and perform a range of functions.

The adviser should control which elements of functionality to open up to clients to allow them to self-serve. 

Most practice management systems now provide some form of client portal capability and they are generally quite quick and easy to deploy.  

But if all your clients are happy with the status quo then why should you bother introducing a client portal?

Here are a few reasons:

  • Some clients will welcome being able to get answers to simple questions about their portfolio as and when they want, rather than having to wait for you to answer.
  • It will reduce your costs. Your staff are an expensive resource and if your clients can happily self-serve, then your staff can focus on other, more productive and profitable tasks.
  • It provides tangible evidence of your service and will help to justify your fees. 

Client portals can be a highly cost-effective way of communicating appropriately and securely to your clients and keeping them engaged.

Then there is ‘screen sharing’, or video-conferencing, which allows advisers to both see and talk to their clients remotely. 

Many practice management systems offer some kind of capability here as well. But, again, if your clients are not pushing for this type of functionality then why should you bother?

  • It will save you huge amounts of time and money, that is, not spending your life on the road driving to see your clients.
  • A number of your clients will already be using this sort of capability in other areas of their lives, so the technology will not actually be a barrier to them; in fact, some of your clients may prefer, and even expect, to engage with you in this way. 
  • Screen sharing offers a much richer client experience by allowing both parties to see facial expressions, to jointly view documents and generally work in a collaborative manner that promotes mutual understanding and enhances relationships.
  • Recording screen share sessions provides a much stronger record for compliance purposes.
  • It will enable you to create a lower-cost service for those clients that can not (yet) justify your standard service.

Using screen sharing for all your client meetings, or for all types of client meeting, clearly may not be appropriate. But do not assume that your clients are not interested in these types of capabilities only to find out later that they have moved their business away because they felt your service was lagging.

Commercial realities 

Many adviser firms will only accept as clients those with a certain amount to invest, typically around £50,000 or more.

This is driven largely by commercial realities, but it also means many adviser firms are excluding themselves from a very large segment of the market, including clients that may not be commercially viable now but who may well be in the future.

Technology can allow advisers to engage these clients, and perhaps incubate them for the future, by helping reduce the cost of delivery. For example, technology is widely available that will allow consumers to:

  • Key in some, or all, of their fact-find data.
  • Execute an initial 'attitude to risk' questionnaire.
  • Request and arrange meetings with advisers.
  • Upload documents and provide digital signatures where required.
  • Obtain current information about their portfolio and its performance.    

It can also be used to radically reduce the time spent by advisers by using:

  • Cash flow planning tools to expedite the production of financial plans.
  • Data validation tools to ensure that high-quality data is entered right first time.
  • Client-facing reports, such as annual review statements.
  • Pre-configured workflows to ensure administrative and other tasks are undertaken by the most cost-effective resource.

Business growth

Technology can also help adviser firms tap into the vast numbers of people who are currently without an adviser. Of course, there are traditional ways of marketing to these types of clients, but typical customer acquisition costs can be huge and the results variable.

Additionally, many people will have never used a financial adviser before, so alternative and more cost effective approaches might prove more productive.

Social media outlets such as LinkedIn and Facebook are one way, while a growing number of firms recognise the value of creating an online presence and providing online content. Done right, it can introduce your business to new types of clients – clients that are also happy to work with you using technology.

If you do not actively engage with the children, or even grandchildren, of your existing older client base, chances are these younger generations will not come to you once they have built the wealth to require a fuller advice service.

The technology exists to help you deliver content and digital transactional services that are low-cost, relevant and convenient for younger people.

Harnessing the types of digital solutions and tools that complement face-to-face advice services will allow your firm to establish lasting relationships with the wealth customers of the future. And, crucially, your business will also be improving the range of services it offers.

New technology and digital engagement tools are emerging all the time.

Not so long ago there was a concern among a large portion of the financial advisory and wealth management community that these new tools would present a threat to the survival of traditional advice models.

However, we are seeing a definite shift in attitudes, with more advisers now harnessing the power of digital to enhance their own propositions.

In doing so, they are elevating their service offerings to a higher level by providing a much more engaging, personal and rewarding customer experience.

Mark Loosmore is executive general manager, wealth, at IRESS