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Advisors Must Go Digital or Die: Panel

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What You Need to Know

  • Technology is helping advisors meet their clients' needs during the pandemic.
  • Younger investors embrace — and even demand — technology.
  • Financial services lags other industries in providing real-time services.

Advisors are increasingly relying on technology to meet their clients’ evolving demands, and those who don’t embrace it will find it increasingly hard to compete, according to industry experts who spoke Thursday during the Broadridge Financial Solutions webinar “Leadership Lessons for 2021: Meeting Client Demands Through Technology.”

“The last year has highlighted the resiliency and adaptability of every human” in the face of the COVID-19 pandemic and the wealth management industry has been “no exception,” Chris Perry, Broadridge president, said. “When forced to move into a virtual world, financial advisors really stepped up and found new ways to form deeper connections with their clients.”

Amid increased volatility last year, “clients were more worried than ever and the power of technology really allowed advisors to bridge that service gap and continue to provide their clients with the attention they need and gave them the confidence to stay in this game,” he pointed out.

Agreeing, Michael Alexander, president of wealth management at Broadridge, said, “COVID has been an enabler and an accelerator” of technology adoption. And it presents “an opportunity if you look at it the right way,” he said. This has come at the same time that there has been a “rise of new investors” who are younger than traditional investors, he noted.

“For the first time, we’re getting a lot of clarity around how” those younger investors “want to invest and interact, and it’s clearly in a highly personalized way,” Alexander explained. “They want to be connected” to social media and “they are going to be validators and not delegators, and they’re going to want to be very involved in decision-making.”

That is good for advisors because “it means that personal service and advice really matter,” according to Alexander.

‘Embrace Digitization or Perish’

A “key trend is that you either need to embrace digitization or perish if you’re an advisor or firm — it’s not an option anymore,” Alexander said, noting data shows that advisors who don’t have the technology they need are more likely to leave the sector. Almost 80% of advisors surveyed felt their tech was inadequate and more than 50% of that group were thinking of changing jobs, he said.

Another trend is that RIAs are “now driving the industry,” Alexander said, noting they have outgrown the other segments and are “really driving the pace of change and innovation.”

Looking to the future, he predicted: “I think the pace of change and transformation’s going to continue to accelerate and it’s going to result in much more tech-savvy, digitized personal processes for clients, improving the user experience dramatically over the next year.”

As a result, advisory firms are “going to need to find ways to modernize their platforms and mutualize their investments, their innovation” and “build scale — and  I think you’re going to start to see a much greater focus on integration and the ability to sort of have an advisor or a client app store so that they can quickly create [the] best-in-class system that they need,” he predicted.

What Clients Want From Advisors

At the end of the day, “clients still just want us to know them, guide them and make it easy,” according to Ilan Davidovici, principal of Client Experience at Edward Jones.

Almost all Edward Jones clients reached out to the firm’s 19,500 or so advisors when the pandemic started and “that continued throughout 2020,” he noted.

“Human connection is what we all want” — but digital tools have helped advisors to achieve that, he noted.

For example, one challenge has long been that, in part because advisors meet with so many clients, it’s been hard to know which goals are most important to them, according to Davidovici.

One of the things that has helped Edward Jones advisors overcome that challenge is the digital tool called My Priorities it recently launched that clients can access before they meet with advisors and use to set their top priorities, he said.

Enabling Personalized Service at Scale

“There are tools using social media, using artificial intelligence that enable personalized service at scale,” according to Nalika Nanayakkara, Wealth & Asset Management Consulting leader at EY Americas.

For example, “in the past, the advisor didn’t know about a client’s big life moments till the client actually told the advisor,” she said. However, “now there are tools that can anticipate some of those changes before the client tells you [and] even before they happen,” she explained.

While good advisors don’t need a tool to tell them about the most significant changes in the lives of their top clients, they tend to only focus on maybe the top 20 clients, she noted. “These new tools can help extend that focus” to many more of their clients, she said.

Lingering Tech Challenges

Despite the strides the sector has made with technology, challenges remain, says Bill Capuzzi, CEO of Apex Clearing.

For one thing, “people want real-time — they have it in all other aspects of their life but in the financial services industry, for whatever reason, the bar is lower and it shouldn’t be,” he said.

“Why does it take more than five seconds to open an account? It shouldn’t. Why does it take days to transfer money from someone’s bank account to a wealth management account? It just shouldn’t.” And “why does it take two days to settle a trade? This is crazy to me.”

Survey Highlights

The panel was moderated by April Rudin, CEO and founder of The Rudin Group. Before it started, Broadridge’s Perry also provided highlights of a survey his firm conducted in January of 567 investors who work with advisors.

More than half of Gen Z, millennials and Gen X clients who responded said they were interested in hearing more from their advisors this year, but they wanted to use their connected devices as part of the process, he said.

The survey also found that the way clients wanted to receive information was changing. Over half of the respondents said they were more open to reading financial information on social media than a year ago, “with over three-quarters of millennials and Gen Z feeling this way,” he said.

The younger generations were also most likely to take investment recommendations directly from social media, with advisors being the most trusted source of that info, he said.

“I think these are all permanent, systemic shifts that advisors need to work through and make it part of their new-normal playbook,” Perry said.

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