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Tech-Savvy Advisors Are Outperforming Their Peers

The latest Fidelity data shows these "eAdvisors" have higher AUM and more HNW clients.

Advisors are still lagging in technology adoption, but things are looking up.

According to a new survey by Fidelity Clearing & Custody Solutions, the number of “eAdvisors”—or advisors using twice as many technologies as their peers, and have those tools more deeply integrated into the business—has increased by 10 percentage points since 2014.

Still, that only represents a growth from 30 percent of the advisor population to 40 percent. And Fidelity says the gap between the tech-savvy and the tech-skimpy is widening. The firms using digital tools have 42 percent higher assets under management (AUM), 35 percent higher AUM per client, and more high-net-worth clients. Technologically adept advisors are also more likely to have client-segmentation strategies and serve more young (Gen X and millennial) investors.

“Advisors who embrace technology are going to be the ones who scale, grow and ultimately win,” said Tricia Haskins, the vice president of practice management and consulting at Fidelity Clearing & Custody Solutions, in a statement. Haskins added that the lag in adoption isn’t about an aversion to new technology, but just not knowing where to begin. 

The survey identified four areas advisors can focus on employing technology to achieve the greatest impact.

The first is by simply having a good website, meaning compelling visuals, informative content and calls to action. Eighty percent of high-earning millennials said they have a more positive impression of advisors with a good website.

These investors are more likely to recommend their advisor to others if they are using digital tools to enhance their service, especially paperless services like e-signature and email statements and reports. Investors are also more likely to recommend advisors using digital communication tools including email, text messaging and video conferencing.

Finally, Fidelity found that clients who receive a formal financial plan that takes into account all of their assets and liabilities are, on average, seven times happier with their advisor. Data aggregation tools are on the rise, with 87 percent of “eAdvisors” using them. Only 46 percent of the non-tech-savvy advisors are using aggregation, which Fidelity said illustrates opportunity for more adoption across the industry.

Haskins said advisors can achieve the deepest and most tangible results by visualizing what their clients’ end experience will look like and creating a technology map from there.  

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