From the May 2008 issue of Investment Advisor • Subscribe!

May 1, 2008

Building Healthy Online Relationships

Gluck's new product moves advisor/client relationships onto the Web

Many years ago, Worth magazine sent me to the Professional Publishing course at Stanford University. It offered seminars by many leading luminaries in the magazine and book publishing world, most of which I've long since forgotten. But one presentation that's always stuck in my mind was by Paul Saffo, a fellow at the Institute for the Future in Menlo Park, California.

Dr. Saffo's field is the history of technological innovation, and his job that day was to give us some context for the development of the Internet. He made a number of perspective-altering observations, including how radically new technology can change the world we live in; and that the Internet had greater potential to change our lives than the printing press, the light bulb, or the internal combustion engine did in their days.

He also pointed out that while new technology is often used by the public, its greatest impact is usually created by the industries and professionals who use that technology to deliver goods and services better, faster, cheaper: think of newspapers with printing presses, doctors performing laser surgery, or nuclear reactors providing electricity for all of Europe. But the notion that really stuck in my mind is this: Dr. Saffo said that it takes about 100 years for people to figure out the best way to use a ground-breaking new technology (originally Gutenberg only printed Bibles, cars were for joy rides, and Edison first lit up streetlamps, etc.). Since it's only been about 25 years since Al Gore invented the Internet, chances are the ways in which it will profoundly affect our lives are yet to be imagined.

Recently, I was reminded of Dr. Saffo's comments, as my friend Andy Gluck was describing the latest creation by his company, Advisor Products Inc. (which creates and maintains Web sites for financial advisors to communicate with their clients and attract new ones). His latest product--one that enables advisors to give clients Web sites of their own, with which to access their financial information, get answers to their questions, and communicate directly with their advisors (and each other)--struck me as a major leap along the path of finding the best ways to use this new technology. I'm not saying that Andy's innovation rivals the iPhone, but think of the potential in having your clients regularly logging on to a site that positions you as their first and best solution for their financial needs and questions.

A Work in Progress

Advisors Products' Personal Client Portals are just coming on the market, and like any new technology are very much a work in progress. They're available to advisors who already have one of the company's Platinum Advisor Sites (which cost $2,100 a year) for an additional $1,500 a year for the first 35 clients, and then a discounted scale beyond that. The sites are populated with myriad information feeds that tell clients way more than they need, or probably want, to know about what the Dow (or any other index) is doing today, current articles published on a dizzying array of topics, calculators to "what-if" the effect of buying a vacation home in their retirement, and of course their own holdings, allocations, and performance over various periods against the bogey of their/your choice, as well as their net worth at any given time. All of which is fully customizable by the advisor with default parameters on everything from the kinds of personal finance articles the clients will get, to what's in those articles, to which indexes they'll see. If the advisor allows, the clients can override the defaults, to make their own choices.

If anything, the Client Portals are too customizable, as are the Advisor Sites themselves. Over the years, Andy and I have had this conversation many times--he thinks I'm full of sheep-dip, and is probably not in the minority on that score. But I believe I'm a pretty good representative of the consuming public, which is more than happy to use technology to help us do the things we want to do--cook oatmeal in the microwave, or e-mail this column to Jamie Green when it's nearly done--as long as we don't have to "figure out" the device, and don't even talk to me about looking in the manual. Virtually all my appliances--my cell phone, TV, microwave, laptop, the "climate control" in my car, even my washer and dryer--have way more features than I know how to use, and I'd probably benefit from many of those if I ever took the time to learn how to use them, but chances are I won't. I'm waiting for the day when I can buy some technology device, and the person who sold it to me will just set it up to do the things I want, and show me how to do them. Period.

So when it comes to customization, sure, I'd like my stuff to be customized for my use; I just want someone else to do the customization for me. I'll bet that most advisors and their clients are just like me: they want their Web site customized to the information and data and functions they want, but they want someone else to set it up for them. In fact, I think that's what Dr. Saffo was talking about when he said that new technology is largely used by professionals to improve the lives of the public: I don't want to know how to fly the plane, I just want to ride in it to get from point to point. I suspect Advisor Products does a fair amount of the customization of its sites for its advisor clients now, and in the future, I believe (and hope) that it will become one of the primary services it and all other technology companies offer.

Four Big Features

This data, and calculators, and published and proprietary information on the Personal Client Portals is primarily intended to get clients to log onto the sites regularly. In the future, I'm sure Andy and his team will come up with even more compelling content. But the actual heart of the Client Portals is the functions that enable clients and their advisor(s) to interact more often and with greater ease than ever before.

For instance, the Vault holds all of a client's financial documents in one place, in encrypted files and then encrypted again on the server, so that no one can view them without authorization, and backed up in two diverse locations on separate power grids. That means that chances that all these documents--wills, insurance policies, brokerage statements, deeds, tax returns, portfolio reports, communications with their investment advisors and other advisors--and all their previous versions, are far safer and more easily accessible on their own site than they are in the client's own home (especially if their hard-copy filing system is anything like mine).

Then there are the To Dos. Anything a client needs To Do is posted in a mailbox on their site, with a flag showing on the home page. An e-mail automatically goes out to the client whenever a new To Do has been posted to their site. The client can ask questions or make comments about the To Do in a conversation thread to the advisor, and can create To Dos for the advisor as well. What's more, other advisors can be added to the To Do chain--lawyers, accountants, insurance agents--so everyone is clear about who has done what, and who still has things to do. An advisor can monitor all this activity for each and every client on a Dashboard on their own site.

While Client Portals offers too many other powerful features to list, and that number is growing as I write this, another one that stands out is the Referral Generator. Clients have the ability to create a site for a friend who is in the market for a new advisor. Those sites are populated with default articles, data feeds, and calculators, and a simple financial planning questionnaire that feeds 12 bits of data into MoneyTree, which an advisor can use to initiate a discussion on the client's retirement plan. In fact, Client Portals interfaces with most major financial planning, client management, and portfolio management software and, according to Gluck, will soon work with all of them.

Finally, there's the Blog. Front and center on every client's home page is the smiling face of the advisor along with today's, or this week's, or this month's, words of wisdom from the guru her- (or him-) self. It's an unprecedented opportunity to get in front of all your clients on a very regular basis, and talk about things that are important to them, or you, or hopefully both. They can respond, even starting a discussion chain between each other and you. It's a level of interactivity that hasn't been possible until now. Even better, for the price of a $150 camcorder, you can deliver your blog in streaming video: easier for the clients to hear, and much easier for you to create, once you get the hang of video stardom.

As powerful as I believe Andy's Personal Client Portals are today, it's really their potential that has me excited. We're talking about an interaction between advisors and clients that is far more frequent, intimate, and, well, interactive than has ever been possible before. Want to assess your client service? You can probably get the answers back from a client survey in a day. Want to calm clients' nerves about a bit of bad news (Thornburg Mortgage, perhaps)? You can post something within minutes. In the future, Andy's team and others will come up with untold ways to use this technology to better serve your clients: bill paying (to collect all their budgeting data), mortgage and credit card management, marketing new services such as trusts or multigenerational planning, automatic tax return generation, the list just keeps on going. After a couple of cups of coffee, I'm sure your ideas will be better than mine. I believe that Client Portals is just the tip of the iceberg. But the technology is already far enough along to benefit clients and advisors today, and prepare them for the coming Internet benefits of the next 75 years or so.


Bob Clark, former editor of this magazine, surveys the advisory landscape from his home in Santa Fe, New Mexico. He can be reached at rclark7000@aol.com.

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