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Avoiding Digital Tools Could Threaten Asset Growth

Websites and email communications are mainstream among financial advisors, but far from ubiquitous, according to research firm Aite Group. The most common reason is restrictions from the firm, but other advisors still doubt that investments in digital properties and content will lead to more clients, assets and revenue.

In a new report, Aite found a correlation between practice performance and digital adoption, suggesting advisors not embracing digital communication could be leaving money on the table.

“When looking at practice performance based on client and revenue growth, higher performing practices were more likely to deliver content through their practice website and through email than low performing practices,” Aite said, in the report.

Credit: Aite Group

Credit: Aite Group
Credit: Aite Group

Sixty percent of practices that grew client assets an average of 5 percent over five years delivered content through a regularly updated website and email campaigns. Only 40 percent of the firms that lost client assets over five years were using digital communication.

Advisors with a strong web presence are often more easily found by prospects, especially among Gen X and Gen Y investors, Aite says. These advisors are also better positioned to improve cost efficiency with self-service tools, although advisors who have invested in digital campaigns had already achieved a certain size and level of success.

The report did not look into the relationship between asset growth and social media adoption, but did find that high-performing practices were more likely than stagnant or losing practices to focus on next-generation client acquisition. These firms focused on digital communication, expanding services to clients concerned with budgeting and debt management, and self-service tools that meet client needs cost effectively.

Aite recommended that all advisors need to build a website to find and engage with prospects and clients. The best will use tools that integrate client data for targeted and customized content for clients. 

TAGS: Technology
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