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Four Technology Issues Faced by Advisors

How to deliver sensitive information in a safe manner

It’s not just Millennials who’ve come to expect certain services delivered online and in real time. Today’s high-net-worth (HNW) clients of all ages have technology expectations that, if left unmet, could lead to lower client retention and lost new business. As one financial advisor confided, “We have challenges with our client interface. I believe that is why we lost some business.”

Some wealth managers are certainly ahead of the curve when it comes to the use of technology. One issue all are grappling with, however, is security—how to deliver sensitive information, such as record-keeping statements, in a safe manner and how to deliver services, such as routine wire transfers, in a timely manner.

Here are four technology issues advisor need to consider.

Wire Transfers

When it comes to security breaches, wire transfers have proved to be problematic and persistent. One matriarch recently shared with me she had $250,000 stolen from her accounts in one transfer. The hacker not only accessed her account, but also had simulated her voice when calling into her advisor confirming the transfer. And at a recent industry meeting, almost every firm in attendance reported one of their clients had been breached.

HNW clients ask themselves, “Will my financial advisor make me whole if I am hacked?” The matriarch noted her bank and the firm to which she supposedly wired money stepped up and refunded the full amount within 24 hours, each covering half the loss.

Here are two tips to avoid problems and confusion:

  • Be clear and upfront with your firm’s policy for refunding stolen monies due to wire transfer fraud. Let your clients know if your bank can and will step in and make clients whole, as it could be a strong competitive advantage.
  • It can be difficult to balance your clients’ desire not to be hacked with their dislike of the additional time and hurdles security measures require. Explain to clients why your firm may require multiple security hurdles, such as multi-factor identification. This should help allay client feelings of inconvenience.  Additionally, some firms hold client meetings where a security expert speaks and shows client vulnerabilities and steps to take to protect oneself. After such meetings, most clients are more than happy to follow multi-step security measures.

Online Recordkeeping Portals

The ultra-affluent, like those with less wealth, have become used to receiving and viewing information online. Some firms have platforms that enable their clients to log on and view their regularly updated record-keeping statements, which often allow for multiple levels of access based on agreed-to permissions set to reflect administration rights. Other firms provide pre-loaded iPads with record-keeping statements that need to be sent back to the firm and reloaded. Others simply don’t provide statements on line. Some of the hold-ups in providing online recordkeeping are resources and costs. Others are concerns regarding security.

The importance of technology around reporting can’t be underscored enough. In the last few years, a number of providers, such as Archway, have come out with systems that provide a far higher level of granularity and customization than in the past, leading many single family offices to rethink excel files and QuickBooks, which for many has been the method of choice. Just a few years ago, I met with the head of a leading private client firm to provide counsel on whether this firm should cut back its technology spending allocated to what was then considered a leading edge record-keeping and reporting system. My advice was they shouldn’t despite it being a cost center, as it was a major differentiator for them. Today, that firm is considered as having a major competitive advantage.

The Client Interface

 HNW individuals enjoy and have come to rely upon their iPhones, iPads and other mobile devices as much as anyone. The difference is that private investors are paying quite a bit to their advisors to manage their wealth in a high-touch service-oriented manner. They expect to be able to access necessary information when and where they want. At a minimum, basics such as company websites need to be mobile-friendly. Online service is also highly recommended. As one advisor noted, his firm’s website directs clients to an 800 number for assistance. “Nobody wants to deal with that. I don’t want to deal with that,” he lamented.

Service Inconsistencies

In their bid to provide secure services, protect their clients and get clients to use certain technologies, some firms have created inconsistencies between what clients can do for themselves versus what a trusted advisor can do. One advisor noted that a client can easily move funds from one account to another. But if the same client requested he do the same, it could take as much as a few days to gain approval to execute due to the security checks and compliance policies. This disconnect in ability to serve has raised red flags, as this situation encourages clients not to engage with their advisors when client relationships are the key to being successful.

Time and again it’s been demonstrated that relationships built on understanding the needs of clients, backed up by service, are what create and sustain long-term successful ultra- HNW client engagements. But that, by itself, is no longer enough. Potential new clients will judge a firm by its use of technology. And existing clients will increasing base part of their customer experience on how they are served beyond traditional means.

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