Technology: A New Dialogue and Era for Financial Advice

When the values of many retirement accounts took a turn for the worse, investors found themselves in unchartered territory and quickly searched for advisors who they believed could help them rebuild their finances. Investors came forward looking for honest and supportive financial advice. Unfortunately, many did not receive the caliber and level of advice they expected. As the U.S. retiree population continues to grow, more investors than ever will be looking for advice and financial advisors will be tasked with finding a way to supply the increased demand.

Although the vast majority of financial advisors are honest and well-meaning, providing individualized advice requires point-in-time understanding of investment priorities and asset performance. With unrest and distrust still prevalent in the marketplace, many investors are seeking more personal investment relationships. Technology can help advisors establish a competitive edge—one that can enable them to better establish connections and dispense appropriate and personalized advice. Specialized technology exists today that can help advisors understand and anticipate client needs and portfolio performance. The technology also reduces the need for redundant data entry, thus freeing advisors to do what they do best: interact with investors.

The Importance of Technology to Fulfill Investor Needs A recent Aite Group survey of 400 U.S. advisors found that the largest line item on the advisors’ technology budget (14 percent) is spent on improving their financial planning applications. It is safe to say that the marketplace has clearly recognized the need for technology that can help advisors automate the account planning process and eliminate the time that has historically been dedicated to administrative tasks such as data entry.

Various tools, including customer relationship management (CRM) software and front-office advisor desktop solutions also help to meet the technology needs of financial planners. This technology not also enables the client to view and monitor their accounts—even when they are not physically meeting with their advisor.

In any person-to-person business relationship, it is important to keep in close contact and technology can be used to provide timely reminders. For example, a financial planning solution can alert advisors when insurance policies are due for renewal, providing a good reason to call their client and start a conversation.

A Different Dialogue

In an effort to restore trust, advisors are engaging in more open conversations with investors. The aforementioned Aite Group survey found that half of the advisors believe that financial planning is just as important as investment management, but that many advisors have only completed a financial plan for a small percentage of their client base.

Investors want direction from advisors and they want to understand their progress when it comes to meeting individual goals. As such, goal-based investing is becoming increasingly important. A complete, integrated technology solution assists advisors with documenting client investment goals and provides the ongoing monitoring and analysis that will track performance and the technology can even provide advisors investment recommendations for their clients.

Ideally, solutions that engage the investor and advisor together help forge a bond and establish trust and confidence. For example, some solutions have electronic questionnaires that advisors and their clients can fill out together to help advisors assess specific needs and wants; a critical first step in the planning process.

For advisors who want to expand their business, financial planning can also provide a unique growth opportunity—and one that advisors are finding has a positive impact on their business. According to the Aite study, 76 percent of advisors who consider financial planning more important than investment management cited financial planning as having a positive impact on their business.

Technology Fuels a New Era of Advice

In many ways, technology will be a strong catalyst for advisors who are seeking to expand their business in this new era where true, honest advice is paramount. This sentiment is quickly catching on. While advisors may define a financial plan differently, they all agree that financial planning is now a process that advisors and clients must embark on together. If data and advice can be inextricably tied to the future of financial planning, we will see more investors more frequently receiving the answers and solutions they now need as a result of technology.

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