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Next Frontier for Financial Advisors: Your Mobile Phone

Next Frontier for Financial Advisors: Your Mobile Phone

Plenty of apps track your activity, food consumption, heart rate and blood sugar, to encourage you to stick to your health goals. That same model is coming to wealth management, with real-time alerts from financial firms that try to curb bad behaviors like overspending.

Executives speaking at the Reuters Global Wealth Management Summit in New York this week described mobile alerts as the next step in helping clients improve their finances.

For example, GPS technology now used to send offers to shoppers when they are near a retail store can be used in the opposite manner, said LPL Financial Holdings Inc (LPLA.O) Chief Executive Mark Casady. A financial adviser could instead send automated notifications when a client has been inside a favorite store too long, encouraging the person to leave before splurging, he said.

"It sounds a little creepy," said Casady, but soon that kind of alert "will be very normal."

Technology has already dramatically changed the way the wealth management industry conducts business.

At the summit, Morgan Stanley (MS.N) wealth co-heads described an in-house tool that allows advisers to quickly analyze hundreds of accounts for cost-savings or return benefits. Katie Nixon, chief investment officer for Northern Trust Corp's (NTRS.O) wealth business, described an app the bank recently rolled out that changed the way advisers conduct meetings with clients.

Robo-advisers like Betterment LLC, whose CEO Jon Stein also attended the summit, have allowed investment advice to be delivered in pure digital form.

Few of the technologies discussed go a step further by tracking a client's physical whereabouts to scold him or her for spending too much. Executives acknowledged the "creep" factor Casady referred to, but said the benefits may far outweigh the costs.

Neesha Hathi, who oversees client experience and digital platforms for individual investors at Charles Schwab Corp (SCHW.N), drew comparisons to fitness tracker Fitbit Inc (FIT.N), which helps consumers improve their health by tracking activity, exercise and food.

"In many ways, fitness or health are similar in that it's a long-term exercise where you don't necessarily see the benefits that day," Hathi said. "Saving and investing are similar in that you can spend a bunch of money today and you won't feel the pain...(until) a year from now or seven years from now."

In fact, there are already some health-fitness apps in the marketplace.

Ally Financial Inc (ALLY.N) launched an app in April called Splurge Alert, which asks users to identify what they are most likely to splurge on, whether it's coffee or shoes. The app then uses geolocation technology to pinpoint specific stores as "danger zones" and alert users when they get too close.

Toronto-Dominion Bank (TD.TO) has rolled out an app called MySpend which links to customers' bank accounts and credit cards to analyze spending. The app has a feature akin to a traffic light that flashes red if users are above their typical monthly spending.

While such apps could make some customers uncomfortable at first, executives believe they will eventually be embraced.

"Be careful about the creepy factor," said Casady, "but how great to (have) a reminder that allows you to be part of someone's life even when you're not there."


Follow Reuters Summits on Twitter @Reuters_Summits

(Reporting by Olivia Oran in New York; Editing by Lauren Tara LaCapra and David Gregorio)

TAGS: Technology
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