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How to Stop Worrying and Learn to Love Technology

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Financial advisors continue to adopt technology to grow their firms, according to a report released Tuesday by Fidelity. The report found that not only are more advisors adopting technology, those who do are outperforming their peers.

The survey follows up on a 2014 survey Fidelity undertook to see how financial professionals across channels were utilizing technology in their firms. It identified a subset of firms that were using twice as much technology as their cohorts and were getting better business results.

(Related: How to Make Technology Part of Your M&A Strategy)

Back then, about 30% of advisors fit into this “eAdvisor” subset. The 2016 eAdvisor Study found that percentage has increased to 40%, according to Tricia Haskins, vice president of practice management and consulting for Fidelity Clearing & Custody Solutions.

That’s “definitely moving in the right direction and something we’re really excited about because we really do believe that technology is going to be an important part of firms that succeed in the future,” Haskins told ThinkAdvisor on Monday.

She added that eAdvisors have continued to outpace their non-eAdvisor cohorts in their businesses. For example:

  • eAdvisors have 42% higher AUM and 35% more AUM per client.
  • They’re attracting more clients with over $1 million than non-eAdvisors.
  • Their compensation is 24% higher than non-eAdvisors.

The report also found that eAdvisors are happier with their firms. Higher levels of satisfaction are important in the face of the potential exodus of retiring advisors.

“Those firms that really use technology, that have a culture of technology about them, become more attractive in that war for talent,” Haskins said. “The younger folks coming in are going to be more attracted to those firms that are really leveraging technology to help you not only be more productive but also help you have better and deeper relationships with your clients.”

Although the report referred to the non-eAdvisor subset as “tech-indifferent,” Haskins stressed that they aren’t avoiding technology because they aren’t interested.

“Many of them are interested and do believe that technology is going to help advance their business, but we do find that they also are struggling with where to start,” Haskins said.

The constant flow of new releases from technology providers makes it hard for some firms to identify valuable tools, she said.

“It really is difficult to wade through everything that is out there and to understand what solution is right for you,” she added.

There are some ways advisors who are overwhelmed with the options available can narrow their search.

Step 1: Start with the end in mind.

Haskins suggested that advisors who don’t know where to start look at where they want to end. “Get a vision of what you want your end client and prospect experience to be,” she said, “whether that’s collaborating with them via online collaboration tools, video conferencing, streamlined account opening process [or] planning with a total view of assets.”

A clear view of what they want their clients to have will help advisors identify gaps in their current offerings and what they need to plug them.

(Related: When it Comes to Advisor Tech, Size Does Not Matter)

Step 2: Identify growth targets for the firm.

Haskins pointed out that technology isn’t just a way for advisors to connect with their current clients, but a tool for growing a pipeline of new prospects.

“One of the things we find about eAdvisors is that they’re really looking at not only how to engage their current clients but the next gen of investors. They’re thinking long term about their business strategy,” she said.

The report found eAdvisors have 10% more Gen X and Y clients, Haskins said. Attracting younger clients is a priority for them, more so than for non-eAdvisors, “and they want to do it in advance of [them] becoming a majority of their client base.”

She continued, “They feel they have some time right now to implement these things in anticipation of that generational wealth transfer.”

Step 3: Meet clients where they are.

Even eAdvisors may have clients who prefer to meet in a more traditional way. Some technologies like online collaboration tools or social media communication platforms may seem to target the needs of younger generations, but other technologies can help advisors provide more holistic service regardless of their client’s preferred method of communicating.

For example, almost 90% of eAdvisors have adopted data aggregation tools, the third biggest priority for firms in the new report.

Haskins said that’s driven by a move toward financial planning-focused service. “In order to do a really comprehensive plan, you have to see a total view of assets,” she said. “We think aggregation is an interesting thing to keep an eye on.”

Advisors who want to grow their firms need to be able to bring in new clients “while still making sure they care for their current client base in the way they want to be served,” Haskins said.

With technology, “It doesn’t have to be an either-or; it’s an and,” she said. “The way they collaborate and work with their clients is going to shift over time.”

— Read 4 Ways Robo-Advisors Improve Client Onboarding on ThinkAdvisor.


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