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The Freewheeling Life of the Virtual Advisor

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Financial planner Alan Moore works from a guest room in a basement apartment in Bozeman, Montana, where he shares office space with a queen-size bed. His uniform today: jeans and an “Eat Clean, Train Dirty” T-shirt. Ruby Receptionists, a virtual receptionist in Portland, Oregon, takes a call while Moore Skypes with a virtual client in Milwaukee. Their discussion: all business.

Each and every one of Moore’s clients is virtual—a business model he solidified in May when he moved his firm, Serenity Financial Consulting, from Milwaukee to Bozeman so that he could ski 80 to 100 days a year.

“I slowly and deliberately transitioned all of my clients to virtual,” says Moore, 27, a co-founder of the XY Financial Planning Network. “We hardly even talk on the phone. My clients are, for the most part, small business owners and they’re busy. They prefer email or video conferencing. Everything’s electronic. The reality is we don’t have to be with clients face to face. And I haven’t lost a single client. I haven’t had a complaint, not even a question. The people who ask the most questions are other financial advisors.”

A Market Forms

Moore is at the forefront of a trend that is extending the reach of traditional advisors onto digital platforms. It doesn’t diminish the advisor-client relationship, advocates say, but enhances it. It’s also cheaper, faster and more efficient—a win all the way around.

And it’s not just millennials who are looking for digital services; it’s millionaires. A new study from Spectrem Group and Millionaire Corner, as an example, shows 50% of those surveyed want “face-to-face” financial advising through video chat.

Despite the burgeoning demand for digital, a lot of advisors are pushing back. “I don’t think advisors get it at all,” says Cathy McBreen, managing director of Spectrem Group. “Most of the time when we talk to advisors, they’ll say: ‘My clients aren’t like that.’ They need to work with technology as opposed to separating themselves from it. This whole event of going to see your advisor and sitting in their office twice a year—that whole vibe is going to change.”

Boston Consulting Group, in another survey, found that 40% to 60% of high-net-worth investors want to be able to video chat with their advisors and receive customized investment recommendations. However, fewer than 20% of advisors offered those options.

Similarly, recent research from Capgemini and RBC Wealth Management found that 57% of affluent people over age 40 and 80% under age 40 would consider leaving their advisory firm if digital services—including mobile apps and video chat—weren’t on offer.

“Demands for digital capabilities know no boundaries when it comes to age, wealth or geography. Clients want their touch points with wealth management firms to be seamless and fully integrated every time,” said Jean Lassignardie, chief sales and marketing officer for Capgemini Global Financial Services. “These findings reinforce the importance of recognizing digital as a truly disruptive force in the wealth management industry, requiring firms to adapt their business models to meet client expectations.”

The rising popularity of video chat, in particular, is contributing to the demand across demographics for a digital channel.

As financial blogger Michael Kitces, a partner at Pinnacle Advisory Group in Columbia, Maryland, puts it: “This whole world view that using technology is only about working with 20-year-olds is a total farce. This whole idea that only people under 30 use tablets is ridiculous. The fastest growing demographic on Facebook is baby boomers. And what grandparent do you know that doesn’t Skype or FaceTime with their grandchildren? If they can do it, financial advisors can do it.”

At the moment, Kitces says, the industry is still figuring out the tools and the platforms to support a virtual advisory relationship. “Stage one is we get more and more comfortable working with clients online. That’s something we’re evolving as a culture,” he adds. “Remember when we swore we would never put our credit card information online?”

The next stage will involve actually starting the relationship online.

“That will be a big change when it comes. Now you are really into a different realm: How do we build a relationship and establish trust in an environment that starts online? We’re seeing the front end of it now,” says Kitces. “But we’ve got a long way to go before it becomes a mainstream standard thing.”

Emerging Models

What are the early adopters in the digital space doing? For starters, they are working hard to build a brand and, along with it, a strong service offering.

When eSavant launched 16 months ago, the idea was that the online channel would deliver the complete Savant Capital Management wealth management experience—only electronically.

“The most important thing we faced when we launched is we wanted to marry together the best parts of the online experience with the in-person relationship,” observes financial advisor Steven Geri, director of eSavant. “We didn’t build a technology solution. We’re not a technology company. We simply said: How can we use technology to better serve our clients and prospects?”

Savant Capital Management, headquartered in Rockford, Illinois, has nine offices in three states and $4.1 billion in assets under management. The average client is 60-something. Clients served by eSavant are 10 or more years younger and they are very comfortable online, adds Geri. Each client is assigned an advisor and client service specialist and once the account is opened, communication is typically handled by phone, videoconferencing or email—whichever is preferred.

“Not only can you handle them cheaper, you can handle them faster. Think of the traditional world. Someone meets with you and you have a bunch of paperwork to fill out. In the new world, you fill out the forms online, you do an electronic signature, it’s all done quickly. It’s not necessary to build as many offices because you can extend your reach geographically without doing that,” says Geri. “And if you are meeting over the phone or by videoconference, it makes the advisor much more efficient. You’re hitting the meat of the meeting and getting it done without a lot of wasted time at the front and back end.”

In Atlanta, Wela Strategies, with $81 million in assets under management, rolled out in February as a “technology initiative” focusing on millennials, according to managing partner Matt Reiner.

“We wanted to create something that is efficient and scalable and technology allows us to do that. It allows us to have lots of clients and service them in appropriate ways,” says Reiner. “By focusing on a generation that has grown up with technology, we are building a market that likes to receive their information electronically. They want it on demand and in the quickest and easiest way possible.”

At the moment, Wela is building brand awareness through social media marketing by tackling topics like getting married, having a child and buying a house. The website has a number of tools such as “Rank,” which lets users see how they measure up against their peers and income groups in savings and investment habits. People can also ask financial planning questions about, for example, debt or expenses—and an advisor will weigh in with a complimentary written recommendation or video chat. Assets invested with the firm are charged a management fee.

“We want to really connect with users in our market. There’s a very good network of people here we know we can grow with,” says Reiner. “This doesn’t take the advisor out of the equation. It extends the reach of the advisor. It’s one more avenue where the advisor can connect with the masses. You can only have a certain number of actual clients per advisor. This widens the pool.”

Paving the Way

Probably the most exciting movement in the digital channel today is being triggered by advisors like Sophia Bera, the 30-year-old founder of Gen Y Planning. She is “location independent” but calls Minneapolis home. A financial planner, Bera has worked in the industry since 2007. She launched her virtual practice just over one year ago.

“I developed my business specifically because I didn’t want to have to pay for an office space. I wanted the ability and flexibility to travel more,” says Bera, who serves clients in their 20s and 30s. “I meet with all of my clients, with the exception of a few, online.”

One-third of her clients are financial planning only; the rest have assets with her. An initial planning fee ranges from $1,000 to $2,000 with a monthly subscription after of $99 to $199. She charges 95 basis points on the first $250,000 invested, and the fee goes down from there.

Bera does most of her work from her living room couch or kitchen table. She also does a lot of work in coffee shops. Bera recently sold her desk on Craigslist because she never used it. She calls her laptop bag her office.

She has gotten clients through Twitter, a podcast and her blog. Google “financial planner for millennials” and Bera’s website is the first to show up. Many of her clients are entrepreneurs, bloggers, freelancers or professionals like doctors or lawyers.

“I’ve built my practice around a demographic that not a lot of people want to serve,” says Bera, who is also an active blogger. “We meet on Google Hangouts and Skype. It hasn’t been an issue at all. It’s been more of an asset. A lot of my clients work their butts off. They don’t have time to meet in person.”

Bera recently hired a director of health and financial wellness, a financial planner who is going to take on some client follow-up duties. Also new to the team: a content manager to help Bera with the blog. One woman is based in Atlanta, the other in Charlotte, North Carolina.

“I really want to be able to slowly build out a team that supports the work I do so that I can continue to do the marketing and media stuff,” says Bera. “I’m passionate about what I do—and how I’m doing it.”


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