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Tech Is an Ally, Not a Threat

Amid increased client engagement, the right tech can enable advisors to serve more clients without increasing head count.

Advisors face many challenges in today’s environment, not least of which is keeping pace with and harnessing technology—all while meeting rising client demand for cutting-edge financial solutions and 24-hour access.

Pronounced market volatility has only heightened this challenge, driving unprecedented digital service volume and engagement. During the coronavirus crisis, clients drove a 66% uptick in SMS texting, according to data by Hearsay Systems, and a 500% increase in videoconferencing data traffic for advisors, according to Kentik. Amid increased client engagement, the right tech can enable advisors to serve more clients without increasing head count.

But taking an even deeper look at client tech usage, industry research shows that 67% of investors choose their financial advisor partly for access to advanced investment tools such as online investment capabilities and interactive modeling, while more than three-quarters want the ability to review their accounts in real time from their smartphone or other devices, according to Salesforce research.

The message is clear: Advisors must offer ever more access to advanced solutions for their clients, while facing greater uncertainty and volatility—and steeper demands on their time. And with an unprecedented environment fast-tracking tech adoption throughout the industry, there’s also a nagging worry for many advisors that their clients may choose more tech-enabled competitors—or even tech itself over human service. It’s estimated the automated advice platform, or robo advisor, industry has ballooned by 230% in the past three years and is expected to grow 19.3% year over year in 2020, according to data gathered by BuyShares.

So how can advisors turn tech from a threat to an asset?

Identify What You Need

As financial services applications and data move to the cloud, a new generation of open architecture solutions is making it possible to share and access account information from anywhere, with a greater ease of integration and scale. That was not the case 10 or even five years ago. This means advisors now have more freedom to determine how and what to integrate with any other external ecosystems.

When considering how to build and optimize a competitive tech stack that serves your unique needs, start by identifying where an integrated solution could add the most value. For many advisors, the top must-have is an advanced trading platform, followed closely by an efficient CRM. Think through the different categories of solutions to prioritize, and to what level you’d need to integrate with your existing business infrastructure:

  • Financial planning systems provide a range of advanced modeling tools that can test specific investment scenarios based on a client’s assets, risk tolerance, timeline and long-term financial goals.
  • Customer relationship management (CRM) solutions help track and quantify interactions with clients and prospects.
  • Account aggregation software gathers data from various financial institutions and investment companies to provide a holistic view of a client’s total position.
  • Portfolio management, rebalancing and reporting systems manage individual portfolios, maintain asset allocation and risk parameters, and track and display portfolio performance.
  • Document management systems use cloud-based connections to back up client data while helping advisors share files, manage different document versions and edits, and satisfy compliance documentation requirements.
  • Risk-management tools help quantify risk tolerance and enable advisors to use that data to build suitable portfolios, meet client expectations and win new business.

Make Clear Choices for Your Tech Stack—and Integrate

In a perfect world, these various software programs would come out of the box ready to seamlessly communicate with each other, but that’s not always the case. Even so, adapting tech to suit your firm’s unique needs can be a successful strategy: 60% of firms that used four or more systems experienced 8% higher AUM growth on average, as well as a 10% average increase in their client bases, according to an RIA in a Box report.

Just be careful to do your due diligence and run through real-world testing scenarios before making a commitment—and consider open architecture solutions as a simple way to maximize integration.

Time Is Money, and Tech Delivers Time

One revealing study showed that 86% of clients want their financial advisors personally involved in their investment management, yet more than half feel their advisor wouldn’t even recognize them if they passed on the street, according to Salesforce.

Advisors are time poor: Advising clients, investing their money, and providing necessary documentation and compliance paperwork can eat up more than half of weekly staff hours, according to Aite Group. A strong, integrated tech stack can support back-office processes, allowing you to spend more quality time with your clients and prospects without needing to hire additional staff. 

Loving the Machine

Think less of a disruptive machine invasion of human-replacing robo advisors, and more of a human-empowering expansion of your existing toolkit—a way to solve long-standing pain points, meet customer demand and position yourself for growth. After all, stats show that tech-integrated firms earn an additional $100,000 in annual revenue compared with less tech-savvy competitors of similar sizes, Aite found.

Rather than posing an existential threat to independent advisors, tech can help them achieve greater efficiency, scale and deeper client relationships.


Eileen Kane is a managing director, institutional technology, at E*TRADE Advisor Services.


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