Innovation is the key to success in a rapidly evolving financial services market. But with the rise of new products and delivery platforms, advisors face competition from low-cost robo-advisors and automated turnkey solutions. Advisors also are confronting a generational shift and, as baby boomers enter the drawdown phase, advisors must reach out to a new generation of clients with different needs and preferences.

Trust Company of America recently surveyed nearly 230 RIAs in an effort to identify the challenges that restrict advisors from achieving success in the future and the roles they say technology can play in helping them overcome these obstacles.

According to the survey, the biggest challenge advisors cite is attracting new clients (33%). When technology makes advisors more efficient, it can free them up to focus on revenue-generating activities, like providing a more high-touch approach to connecting with prospects. Because technology helps advisors better serve a larger client base with a smaller staff, firms that leverage technology can also boost their long-term profitability.

More and more, financial advisors are realizing that technology is an important tool to help increase client satisfaction and profitability. However, many advisors have found that new investments in technology don’t always go smoothly. After the initial honeymoon period, the technology may fail to deliver on the promised benefits. Maybe it doesn’t hold up to real-life workloads. Or maybe employees find it less intuitive and find they have to develop workarounds. Perhaps the new technology works well on its own, but it may not properly communicate with other office systems to ensure a seamless flow of data.

According to the survey, nearly half of the advisors are finding that despite large investments in CRM systems, client reporting and portfolio management software, they are frequently not satisfied with the outcomes and/or are not utilizing this technology to its fullest capacity. Moreover, incomplete or inadequate integration was also cited as a top challenge by advisors (43%).

To avoid these challenges, advisors should:

  1. Insist on up-front vendor commitment to full integration and training.
  2. Get a commitment from the technology vendor as to what kind of support they provide through the integration process.
  3. Find out if the vendor can customize the technology to fit your business; if they offer their applications to fully exchange information with your existing systems, and what kind of support they provide through the onboarding process and beyond.

A guiding principle for any strategic decision to bring on new technology should be whether it helps the advisor better serve his or her clients. While technology is no substitute for face-to-face client meetings and personal phone calls, the right systems can help support an advisor’s client experience. According to the survey, almost every advisor agrees that technology has improved their client experience.

Cybersecurity is becoming less of an esoteric topic for advisors. Increasingly, it has become front-page news. In light of the recent surge in cyberattacks, advisors are taking inventory of their digital assets to determine where hackers might exploit points of entry or how data may be lost to system errors. Nearly all the advisors surveyed say they have adopted cybersecurity plans to protect their clients and their businesses.

Clearly, sourcing and onboarding new technology can be a complicated and time-consuming process. And the results may not always deliver what the advisor expects. Nonetheless, if navigated correctly, and with the support of a dedicated technology partner, the right technology can provide tremendous benefits for advisors and their clients.

 


Josh Pace is president and CEO of Trust Company of America.