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.