The lockdowns, social distancing and market volatility stemming from the coronavirus pandemic have elevated the importance of digital engagement, according to a new report.
However, the current crisis has also exposed flaws in processes that are not fully digitized. Completing workflows that require manual intervention can be very difficult when operational volumes are high, clients are anxious and staff members are working from home.
The report, commissioned by Envestnet and drafted by Aite Group, discusses how end-to-end digital capabilities can help RIAs effectively engage and service clients and achieve scalability and sustainability after the crisis ends.
The paper outlines best practices for RIAs to transition all practice operations to the cloud, and support clients, during and after the COVID-19 pandemic.
“The COVID-19 crisis will have significant implications for how financial advice will be delivered going forward,” Andina Anderson, executive managing director of Envestnet | Tamarac, said in a statement.
Aite Group conducted an online survey from April through June 2019 among 400 U.S. financial advisors, including 98 independent RIAs and 48 hybrid RIAs that maintain a broker-dealer affiliation.
The survey found that independent and hybrid RIAs consider the acquisition of new clients to be the top benefit of digitization. In their view, digital tools are crucial for engaging younger prospects and the next generation of clients.
However, few advisors said they were satisfied or very satisfied with their client-facing digital offerings.
Among independent and hybrid RIAs, client adoption of digital tools was low before the pandemic struck, according to the survey.
Only about a quarter of independent and hybrid RIAs said a majority of their clients used digital access to reports and statements — and this capability achieved the highest client adoption rates.
Trailing far behind, just 12% of surveyed independent RIAs reported that the majority of their clients were checking investments and goals digitally. Twenty-one percent of hybrid RIAs said that most of their clients were using digital investment planning tools.