At the Envestnet conference this past May, the late Jud Bergman was asked his thoughts around technology’s place in our industry. He astutely concluded, “It’s counter-intuitive that [by building a digital connection with the client] great technology can contribute to a stronger human relationship.” It’s conference season once again, and in my conversations this fall, advisors are still questioning if clients desire more high-tech service or more high-touch service from registered investment advisors. In our on-demand-driven era, clients are really asking for increased access to their advisors—hoping to review their accounts and their financial health on their own timeline, whether that is 3 p.m. when they find a short break in their schedule, or 2 a.m. when they are unable to sleep. The on-demand culture is real and is available to clients when they are grocery shopping, watching TV or movies, or listening to music. Why wouldn’t they expect the same delivery of service when dealing with their financial advisor?
What most clients are not asking for is the ability to take the reins and manage their portfolios themselves. I don’t hear a lot of end clients saying, “My RIA needs to have technology in place to allow me to manage my accounts through an iPhone app, or I am taking my assets elsewhere,” yet many RIAs seem to be fretting about just that. RIA owners are confusing our on-demand culture with the do-it-yourself (DIY) mentality. I liken this to the Amazon effect we are seeing in the retail industry. Consumers want the ability to quickly go online, compare a large number of vacuums and order the one of their choosing, knowing it will fit their needs and arrive quickly. They aren’t going online to find all the different parts to the vacuum to then build it themselves. Clients of financial advisors are no different. They want the ability to quickly go online, check the dynamic status of their portfolio versus a relative benchmark or set goal and then virtually interact with their advisor for any questions they may have. Most aren’t interested in performing the due diligence on all their investments, implementing their portfolio allocation and then regularly rebalancing on their own.
Advisors fretting about whether they will be replaced by technology are missing the point entirely. Clients don’t want to use technology to replace their advisor; they want to use technology to interact more often with their advisor and to enhance their relationship! Instead of focusing on a robo-like experience, advisors should think of innovative ways of leveraging technology to improve their communications channel with clients. How can RIAs best provide a higher-touch experience to an ever-increasing client base?
Text messaging, video conferencing, two-way client vaults, client surveys, customized and curated news feeds for clients—all of these technology tools make the advisor more available to the client and help make the client experience more central to their own financial goals. Our industry has made great strides in the past few years around financial planning software and forecasting tools to answer the three core questions every client asks: 1) Do I have enough to retire? 2) Do I have enough to send the kids to college? 3) Do I have enough to meet my philanthropic goals?
As artificial intelligence platforms continue to evolve and become more mainstream, advisors will have the opportunity to further customize their firm’s offering to each client’s specific needs. From the advisor’s perspective, technology is a valuable tool allowing them to interact with clients more frequently and in more ways with an ever-growing client base. From the client’s perspective, technology enables a deeper connection to their advisor and the firm servicing them. At the core of both of these perspectives is the desire to increase human interaction through leveraging technology. Technology isn’t developed to replace the human interaction of our relationship management–driven industry; it’s developed to enhance it, as the late Jud Bergman so eloquently pointed out.
Matt Sonnen is founder and CEO of PFI Advisors, an operations and technology consulting firm for RIAs. Follow him on Twitter at @mattsonnen_pfi.
