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Misconceptions Keep Some Advisors from Embracing the Digital Evolution

Dispelling some popular myths advisors believe about embracing technology.

By Stuart DePina

Strong client engagement is at the heart of a healthy advisory business. Sustaining and improving this engagement is critical to a firm’s vitality and its bottom line, but building and nurturing solid client relationships is no small task. It requires communication, trust and the ability to provide added value to clients’ financial lives.

The wealth management industry is transforming. Investors’ expectations have shifted – today, they want to engage with advisors in the digital world.

More investors want access to their financial information at any time, from anywhere and on any device they choose. At the same time, they still want access to professionals who can provide customized, experienced advice, analysis and financial planning assistance. To meet this new reality, advisors must embrace and leverage new technologies that give their clients access to the digital solutions they demand. This can allow advisors to focus on the aspects of wealth management that humans are best suited to provide.

While many advisors understand the significance of the digital transformation, some have misconceptions that stand in the way of fully embracing a more digital approach to business. Among the most common include:

Myth: Only young investors are demanding digital solutions.

Fact: The shift toward digital is being seen across all age groups and demographics. Even among groups that advisors mistakenly perceive to still want the traditional paper- and phone-based engagement (baby boomers, for example). These investors are gravitating toward digital interactions and experiences.

Advisors using Tamarac technology are seeing strong adoption of their client portal amongst their retired and nearly-retired clients. These clients generally have a collection of accounts, such as IRAs, taxable accounts and variable annuities. Since their investments across their accounts are organized in a tax-sensitive manner, the consolidated performance and allocation summary reports in their online and mobile portals are the best way for them to keep tabs on their wealth. And since these same clients are more likely to have a comprehensive financial plan, financial planning software provides clients with an easily accessible update of their financial horizon in their portal.

The prominence of mobile technology in investors’ daily lives is driving clients at all life stages to access their financial data digitally. For clients who are not as familiar with technology, some registered investment advisors (RIAs) are finding success in offering “electric concierge” services to help their clients get started online by setting up their portal, linking outside accounts and by making all document exchanges done via their client portal document vault.

Myth: Providing investors with greater access to information will increase the number of phone calls and emails to advisors.

Fact: Providing more data can actually decrease the amount of questions an advisor receives from a client and increase the level of client satisfaction. In cases where access to data does result in a client interaction, advisors can use it as an opportunity to demonstrate their value and strengthen their relationship. With technology solutions, advisors can showcase this digital access as a differentiator when meeting with prospects and new investor clients.

Myth: Mailing financial data and reporting information is more secure than sharing it online.

Fact: Physically mailing data has its own, potentially greater security risks. Many people can touch a paper report as it makes its way to a client, putting it at risk of getting lost or stolen. Many platforms have a high level of security, such as dual-factor authentication process, making it a safe and secure way to instantly share financial information with clients.

Today, advisors have a tremendous opportunity to adopt a technology platform that gives their clients and prospects the access to information they desire while reducing the amount of time it takes to service those clients. The reality is that the demand for digital solutions is here to stay and will only increase going forward. RIAs need to ensure they are implementing a sound, integrated and effective technology strategy to stay competitive and meet the ever-evolving needs of their existing and future clients.

Stuart DePina is president of Envestnet | Tamarac, which offers a web-based platform unifying portfolio management, rebalancing, modeling, trading, billing, and reporting for independent RIAs.

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