The rise of technology in wealth management has allowed advisory clients ever-greater online access to their account information. But it's also given rise to fears that increased digital autonomy may call into question the need for advisors' services.
That need not be the case.
Until just a few years ago, texting clients was unheard of. But according to Advisor360°'s
Still, our survey found that few advisors relish the idea of giving more autonomy to clients in the planning process. Sixty-two percent of clients surveyed were comfortable sharing documents while only 33% said they were comfortable with giving clients the ability to transfer money in and out of accounts autonomously. On the issue of trading, only 23% were comfortable allowing clients to trade autonomously in their advised accounts.
There is good reason for such concerns. The advisor's role is not only to provide recommendations but also to protect their clients from making poor, sometimes emotional, decisions. Allowing them to potentially bypass their advisor and liquidate a portfolio could have disastrous repercussions. Too much client autonomy seems counterintuitive — after all, people hire wealth managers for professional help and investment guidance. If secure texting and social media accounts are now mainstream, how far away are advisors from giving clients the ability to engage more with their own portfolios online — three years, maybe five?
Yet financial advisors need to recognize that clients will insist that the industry move in this direction. Next gen investors are extremely self-sufficient when it comes to technology. They want to manage their financial lives online just as they do in other areas of their lives and to see a complete view of their financial lives in a single click.
Best outcomes can be achieved when the advisor and client actively collaborate on the financial plan. Digital advisor-client collaboration can go beyond texting and document sharing and advisors can provide guardrails that allow clients the opportunity to discuss fears and concerns. Here are three ways in which technology can help advisors foster increased client engagement and collaboration throughout the financial planning process via online portals — without driving clients to their own devices.
Train clients
Advisors who invest time and resources in walking clients through their digital portal, demonstrating its benefits and how to use it, not only increase the odds of their clients using the software successfully, but also reinforce their own expert status.
Use secure tools
Getting clients to share information about accounts and assets held outside the firm is often a stumbling block in financial plan development. Using a portal with a secure document vault means clients can upload and share important documents with their advisors. It also means that advisors can securely message clients to schedule meetings, set reminders and share agendas to keep clients on track. This not only reinforces trust in the advisor but makes them a tangible and ongoing part of the client's life.
Embed technology into the client experience
To keep the advisor-client relationship strong, client portals can provide timely information and guidance on recent market events to help ease clients concerns and encourage them to reach out to their advisor using online calendar scheduling and chat capabilities. Client online activity alerts can also help advisors actively reach out to clients who may be editing and viewing their accounts —whether due to a recent life event or market volatility. This is another great opportunity for advisors to offer guidance and strengthen their relationship.
Firms that use technology that fosters advisor-client collaboration and gives clients a greater role in the financial planning process will be helping the industry take an important step forward in 2023 and beyond. With clients more engaged in the financial planning process, advisors have more time to spend on personalizing their financial plans, managing portfolios and guiding clients on appropriate investment choices. Used correctly, wealth management technology has the potential to improve the overall experience for clients and advisors alike.
