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Personalized and Frequent Contact Is What Clients Want Now

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Two big questions advisors must ask now are how has their business changed due to the pandemic, and how are they evolving to be sustainable going forward? These questions were addressed in a recent webinar held by Envestnet, pulling from their team of experts.

“In these times, advice becomes more relevant and more important,” said John Harris, Envestnet’s managing director of global advisory sales.

He said the spike of activity they saw on their platform earlier this year was “healthy activity,” in that clients were responding to the crisis by rebalancing portfolios, harvesting losses on accounts and making risk tolerance changes.

In fact, Envestnet found an average of 8,573 risk tolerance changes a month in 2019. That spiked to 35,645 in March 2020 and in June came down to 16,570.

“This is exactly the right activity we want to see,” he explained. “It’s advisor-guided responses to take advantage of the situation, giving clients a feeling of control and an opportunity to stay active but not abandoning their portfolio altogether and going to cash, for instance.”

Also, to be expected, digital needs are greater with people working and staying home, but advisors should share information in “blocks, short interactions that address bite-sized topics, like Social Security, life expectancy, life insurance needs, income protection, long-term care and overall health care needs during retirement, making this approach much more palatable for clients,” said Envestnet MoneyGuide Chief Operating Officer Joe Miller.

“Personalized advice is the real driver of value for clients,” he said. “In our research, 70% of wealth management clients see highly personalized service as a factor in whether to stay with their current advisor or switch to another firm. But more important, 75% of clients said they want their advisor to send updates that are personalized, specifically, news articles, statistics and visuals relevant to [client] portfolios. How to send? More advisors are leveraging client portals.”

In fact, he said they’ve seen an increase in portal use in Q1 compared to 2019 by 39% for new clients and 44% by existing clients. He recommended using “gamification” (tools like Bliss) to help clients, and make it more fun “to attract the younger generation.”

Online tools for financial planning were found to be most important to 56% of those surveyed by Envestnet, pointed out Julie Williams, senior vice president and head of RIA sales for the firm. Educational tools that build optimal portfolios were next in importance at 51%, followed by online portals and online apps.

Frequency of communication is still key, though, and for 9 in 10 people stated as the main reason they would recommend their advisor, she said. But communication by email is king, she added, in fact far more so than face-to-face meetings.

To wit, 75% of those under 50, and 87% of those over 50 said email — both personalized and frequent — was the best form of communication with their advisor. Those over 50 also favored face-to-face (30%) and newsletters (26%). However, those under 50 much preferred other communication such as texts (33%), newsletters (26%) and phone calls and blogs (25%) while only 24% thought face-to-face was important.

How to Prepare for the Future

Advisors should not underestimate the fusion of health and wealth, Harris noted. In fact, “92% of Americans said nothing makes them happier than having their finances in order,” he said, citing a 2019 Northwestern Mutual study. “What an impact you can make by doing this for your client.”

To provide that holistic approach, he suggested advisors expand their practice to add people or have third-party contacts to explain topics such as life insurance, wealth transfer, loan and credit management, tax planning and long-term care insurance advice.

Discussing lifestyle with clients is key, especially now, Williams stated. “Take a step back,” she said. “What are they experiencing? After all, one in four Americans are out of work, 40 million have filed for unemployment, there’s 130,000 deaths [at that time], parents are home schooling children and working,” she explained. “Instead of jumping into discussing plans, ask ‘what’s going on with your life?’ … It’s a significant way to evolve the conversation.”

She also recommended volunteering in the community, such as helping small businesses rebuild or providing financial literacy seminars for young people. Also, to help sustain your own business, leverage social media.

The pandemic is an opportunity to foster action, Harris stated. Form strategic relationships, optimize the firm’s footprint, make sure the staff has all the necessary skills, educate clients on video conferencing and start training the next generation of younger advisors. “Also, build a succession plan,” he said.

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