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Automation is Here to Stay in Wealth Management – Are You?


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Written by: David Benskin | Wealth Access

For the past couple of decades, wealth management has been a pretty sleepy corner of the financial services industry.  Not much has changed in the process of delivering financial advice over the years, despite the fact that there have been seismic shifts in technologies, demographics and consumer demands during that same time frame.

As financial advisors, we’ve been able to pretty much navigate the last ten or fifteen years with a complicated story about the markets, peppered with some industry jargon, an excel spreadsheet or two, and a lucrative AUM fee.    Life was good.

But, fortunately for some and unfortunately for others, those days are over.

Wealth management today is being quickly and drastically re-written by new competition, technology advancements and a new generational view that “we don’t want to work with our father’s advisor anymore.”

The cold hard facts are that according to Accenture, $30 trillion in wealth[1] is about to be transitioned to the next generation, yet according to Schwab Advisor Services, 84% of advisors[2] have no relationship with their current clients’ children.

These are not good numbers for the typical financial advisor and point to some urgent changes advisors need to take to ensure they have a sustainable business going forward as clients continue to age, draw down their assets, and advisors’ business valuations with them.

In order to stay relevant in this new world order, connect with the next generation of current clients and reinvigorate asset pipelines, advisors need to take a page out of the technology disruptors that have devastated other service industries by focusing on providing a better client experience through technology.

A better client experience has been the calling card by which the big Internet players (Amazon, Apple, Facebook, Google, Netflix, Uber – et al) used to gain exponential growth and bankrupt legacy industry participants.  Think travel agents, newspapers, magazines, book sellers, taxi drivers, photo developers, video rentals, music stores, retail businesses and more – all of whom didn’t understand how consumers were changing in the way they wanted to engage with their providers via technology and were slow to react to automation’s encroachment into their core businesses.

When looked at through the lens of the robo-advisors currently targeting the wealth management industry today – and not just the annoying little guys, but the big firms like Schwab and Vanguard who have gathered billions of assets in a few weeks through their new robo platforms – and this pattern sounds very familiar.

According to a study recently released by global consulting firm, Cap Gemini[3], 64% of affluent individuals, including high net worth investors, expect their future wealth management relationship to be digital.  In that same study, 82% of affluent individuals, including high net worth investors, under the age of 40 expect digital wealth management interactions.   Additionally, 65% of affluent individuals, including high net worth investors, will leave their wealth management firm if an integrated channel experience is not provided.

The evidence and inevitable trends documented here are hard to refute.

So what can independent advisors do to not only survive, but also thrive from these changes?

First, advisors need to admit to themselves that they can’t keep on doing business the same way and need to begin to embrace new technologies.  Investors today don’t want to meet with their advisor in person reviewing paper reports that are outdated the minute they were printed.  Investors today want to graphically see their entire balance sheet in one place on their mobile device to model the impact of what a trip to Tahiti will do to their retirement picture, while waiting for the waiter to deliver their drinks on a Saturday night.   If you don’t provide this functionality to your high net worth clients, then they will find someone else who will.

In order to respond to this new consumer demand, advisors need to start to incorporate the best of digital advisor technology to enhance the client experience and engage clients and prospects online and on their phones through advanced wealth management reporting and analyses.

The good news is that there is a renaissance happening in advisor technology.  Advisors can take advantage of integrated, purpose built technology to be able to provide an interactive website and client portal with aggregated wealth views to engage clients online and on their phones, while bringing in operational efficiencies to lower costs so that advisors can compete in a world of “free” advice being offered by the big brands such as Schwab.

All advisors have to do is take that first step and get started.  Wealth management is no longer that same sleepy corner of the industry anymore.

Automation is here to stay; the question is – are you?

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