If a client and advisor relationship is like a marriage, ‘onboarding’ is the dating stage—the time before signing on for good, and when a wealth advisor wants to make the best impression he can. It is a delicate time when a prospect and an advisor are testing out their relationship, seeing if the two can work with each other over the long term, and determining if the advisor can understand and meet the financial needs of the pursued prospect. For the advisor, the benefit is more than just landing a new client; it’s achieving a reputation as a smooth operator, one that will quickly lead to more prospects. The faster it’s done, the more opportunities there are.
“When we have surveyed high net-worth clients, we have found that an excellent client interaction can double the number of referrals for that advisor,” says Peter Delano, senior research director with business advisory firm CEB Tower Group, whose main area of focus is the back office area of wealth management. “It’s not just something that has importance in terms of closing the deal, or turning a prospect into a client. But it has bigger ramifications to drive other clients—for that initial new client to recommend you.”
So how does an advisor speed up the cycle from initial introduction to blissful partnership? Digital onboarding—or using online tools to turn prospects into clients—is one idea taking hold everywhere from the smallest single person shop up to multi-national firms. The idea? How to woo prospects quickly with digital dazzle, showing off your cyber smarts with attractive data presentations and showing sensitivity to a prospect’s time and space with the smooth use e-mail and web conferencing. A happy partnership will multiply: No client gives referrals for advisors they aren’t pleased with. So the faster an advisor can sweep a prospect off her feet, the quicker more will follow.
Research firm Celent says greater revenue and higher customer retention is two of the top nine benefits of automating the process of signing clients, according to its October 2012 report “Institutional Client On-Boarding in the Financial Industry.” Smaller firms too can benefit.
“Small firms undertaking wealth management for a small group of clients would need much simpler digital onboarding,” says Anshuman Jaswal, a senior analyst with Celent’s Securities & Investments group. “But there is a need for digitalization across the board.”
Making a Good First Impression
As a rep and shareholder with Legend Financial Advisors, Jim Holtzman encourages prospects to use digital files and online storage sites whenever possible to send him information. To him it’s a better route than regular mail where documents can be lost in transit.
While digital tools haven’t necessarily sped up the time it takes for an investor to sign with him as an advisor, he believes they create a positive perception to potential clients — that he’s current with the technology, able to respond quicker and on top of their concerns right from the start. And that, he says, helps build their relationship further down the road.
For example, he uses AdvisorVault, an online platform, where he exchanges information and data with prospects quickly. He’s even had accountants upload tax information from prospects to help set up their accounts securely.
“I want to make their experience efficient and comfortable, and that’s an important part of why I do it,” says the Pittsburgh-based rep. “It builds a pipeline for getting referrals from that client down the road.”
Delano says that capturing new client data digitally decreases errors when opening accounts and gets assets invested quicker. And while online does not completely supplant in-person contact, uploading forms over the web or through email reduces the time otherwise spent tracking down missing pieces of information or papers in their dead tree form. With CEB Tower Group finding the potential for data errors pushing the rework rate—or having to re-enter data or fix a mistake—to 70 percent, ways to reduce those speed bumps can be crucial. Errors do more than stretch the time it takes to open an account; they can also affect the feeling a new client has for their rep.
“The first time an end user [has] a service-related experience, a rework, that’s inefficient and embarrassing,” says Adam Moseley, managing director of technology consulting at Schwab Advisor Services. “Any steps missed, any rework is a reflection of the advisor and they’re looking to avoid that. They’re looking to have an excellent client relationship and set the tone going forward.”
To that end, Schwab is launching an esignature option for 2013—capturing a client’s wet signature, one done on paper, and integrating that electronically into a majority of the digital documents that Schwab supports on the advisor end. While esignature technology has been around for years, financial services firms have been slow to adopt the tool because of concern that a digital signature may not hold up with regulators as well as one that’s hand-signed. But the firm believes it can put those concerns to rest now, and use the digital tool to open accounts faster.
“We envision an end-to-end where paper never touches an advisor’s desk, or the client never touches it,” says Moseley. “It’s about having the right process and the right technology.”
Digital onboarding can bring about more than just a quick and paperless experience — it also allows advisors to get to work with clients’ portfolios sooner, such as suggesting additional investments to put into their portfolio. Celent found that the possibility of cross-selling is higher than 10 percent in a client’s first month, tapering to about 2 percent within six months, according to its report.
“If onboarding is quicker you can get into advising more quickly,” says Celent’s Jaswal. “And the moment you digitize, the information is retained by the advisor for when they want to invest in a new product. The entire process is much quicker.”
Third Party Hiccups
To be sure, digital onboarding can sometimes muddle a burgeoning relationship. Having data sent directly from an advisor to a client during the prospect stage is fairly controllable. But what about data being sent to a prospect about a firm from an outside company? Those mistakes can be damaging—and hard to fix.
Take Roger Pine, a financial advisor and partner with Briaud Financial Advisors who recently had a prospect on his way to the firm—but got lost because Google said the company had closed. As the client looked for directions in the car from his smartphone, the app wouldn’t turn up the College Station, Texas-based offices because it said the firm had been shut down and therefore didn’t exist.
“Here’s a web site not even our own, which impacted the client perspective,” says Pine. “That was a lesson for us. He didn’t end up becoming a client, which I think was for some other reason. But that wasn’t a good way to start a meeting.”
Pine and his firm now check about 10 outside web sites, including Google Places and NAPFA’s web site, every two to three months to review data on their firm, while also testing the contact link on their own site weekly to ensure requests get through as well. Yet, he’s still a fan of digital tools.
For example, Briaud offers to turn a prospect’s paper records into digital files, which helps the potential client and the advisor should they later sign as a client. Pine gets that the new generation of investors really want a self-service model and the ability to send requests or ask questions through online channels at their convenience.
“I think for younger people coming in for multiple meetings, finding a babysitter or taking off from work, they’re going to want more self-service options,” he says. “They’re probably going to want to upload data themselves, and even get an initial set of recommendations electronically.”
Yet most reps today still say they want their clients to feel comfortable calling them, even as they begin to weave more digital tools into their discussions with prospects. Legend’s Holtzman is starting to explore some software programs that digitize and secure the paper questionnaires he asks prospects to complete. He says the time he could save with data stored online would be “huge,” particularly when it comes time for portfolio meetings later. Yet he believes that whenever possible, a meeting in the same room, at the same time, is still the way to go.
“Even for me, it’s important that late at night, or after the kids go to bed, I can take care of some service by e-mail or on the company’s web site,” he says. “That’s absolutely critical. But I’m also old-fashioned in some respects and I like face-to-face. I’m comfortable enough to do web casts or Skype. But I default to a face-to-face meeting. I think it sends a good message.”