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Pay Attention to DIY Investors to Provide the Experience They Want

Advisors that use modern technology solutions in their practices have a considerable advantage over robo advisors.

Today, experience is at the core of what differentiates the products and services people choose to consume. We have seen companies like Zappos, Uber, Amazon, and many others build their entire mission around service and experience. So why is it that we are scratching our heads when we hear that only 28 percent of investors use the services of financial advisors (according to a 2016 BlackRock study)?

DIYers have either had a bad experience in the past working with an advisor, have some distrust in the industry, or would just rather not spend the time or effort to meet with an advisor. In order to break through common barriers with prospective clients, you need to be accessible and demonstrate your value through real-life experiences.

You Can’t Force Meaningful Engagement

If you have ever walked into a department store, most likely you have been approached by an overly friendly salesperson asking if they can help you find something. Your response was likely, “I’m just looking.” Really? You got in the car and drove to the mall to just look? No. You went through all that effort because you were there for a specific reason. The somewhat forceful engagement in this example drives people to react in ways that are contrary to their actions.

The Internet, Wi-Fi and smartphones have made it easy for consumers, especially millennials, to take care of their shopping, banking, research, travel accommodations, personal and professional correspondence, charitable donations and more whenever and wherever they want. In the minds of modern-day consumers who are used to independently handling everything online using digital technology solutions on their own terms, their experience managing wealth should be no different from managing their personal checking and savings accounts, or reserving a hotel room.

However, as all advisors know, wealth management is much more complicated than booking a hotel room or buying shoes online. Ongoing collaboration with an experienced, trusted advisor is crucial for helping investors reach their long-term financial goals and successfully navigate evolving market conditions.

The challenge for advisors is to make today’s investors understand why working with a traditional advisor is the best option for them over the long term. At first glance, this may seem like a Herculean undertaking. After all, more than 62 percent of investors do not have a financial advisor of any kind, according to a 2016 study conducted by Harris Poll on behalf of Northwestern Mutual.

Upon closer examination, however, advisors have the upper hand — all they need to do to engage meaningfully (without being the overly friendly department store salesperson in the above example) is provide the experience that makes advisor-less investors feel in control, and add an extra layer of value to that experience in a way that those investors will appreciate.

Place Clients in the Driver’s Seat, But Don’t Get Out of the Car

Fortunately, technology available to advisors today makes it easy to service clients the way those clients want to be serviced. Modern wealth management technology suites allow investors to log in to digital client portals at any time, and from any location, to view real-time, aggregated performance data for their investment portfolios as well as all their financial accounts on one screen. Investors can also view real-time progress toward achieving their financial goals when they log in, and adjust their goals as they change.

These capabilities place investors in the driver’s seat of the advisor/client journey, while allowing advisors to offer guidance and support as the need arises. For example, when a client changes a goal, modern technology platforms will automatically send a notification to the advisor, who can proactively reach out to offer guidance around the new goal.

Some of today’s technology platforms also offer secure two-way messaging, which enables investors to communicate with their advisor as needed — giving self-directed clients peace of mind that their trusted advisor is just a click away if they have a question or feel uneasy about market developments.

This is why advisors that use modern technology solutions in their practices have a considerable advantage over robo-advisors. Robo-advisory platforms offer access to help desks if investors have problems, but since the advisor-to-investor ratio at most robos is extremely low (typically 10,000 investors to 1 advisor), the person on the other end of the phone really doesn’t have a relationship with the client who’s calling.

On the other hand, traditional advisors can demonstrate their value by making it simple for their clients to view a holistic picture of their wealth at any time, and being there whenever clients want their support and advice.

Personalizing Wealth Management for Clients

According to the 2016 Harris Poll study conducted on behalf of Northwestern Mutual, 54 percent of investors feel the ideal solution combines a human relationship with technology.

Thankfully, the technology available in today’s market can empower advisors to service clients, including self-directed investors, the way they want to be serviced while remaining easily accessible when clients most need them.

David Lyon is CEO and Founder of Oranj, a Chicago-based provider of digital advice solutions for financial advisors.

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