Enough financial advisors still fear automated investment tools that some conferences have sessions dedicated to convincing them otherwise. That was the goal of a presentation on Sunday by Ross Znavor, a managing director and head of commercialization for BlackRock’s Digital Wealth team, at the National Association of Plan Advisors’ 401(k) Summit in Nashville.
Znavor said new technology and tools designed for wealth management, like the suite offered by BlackRock, are there to make advisors more efficient and improve relationships with their clients.
Look to interior design, as an example.
Znavor, whose wife is an interior designer, said that designers used to meet with a client, walk through their home, talk about ideas, agree on a budget, then charge the client a fee as a percent of the budget. That system worked out well for clients and designers for many years—until a television channel called HGTV came along, that is.
People started watching interior design shows on HGTV, and it gave them a window into the costs of interior design. Prospective clients then began asking Znavor’s wife for itemized breakdowns for projects.
In turn, armed with itemized breakdowns, those who might have hired an interior designer began taking on some parts of projects or entire projects themselves. It became difficult for designers to charge a fee based on an opaque budget when clients weren’t entirely sure where it was allocated.
The game changed, so to speak, because an innovation (in this case, HGTV) changed client behavior. As a result, interior designers began charging lower, consultative fees, but because they didn’t need to do as much of the work on their own, they were also able to take on more clients. HGTV didn’t eliminate interior designers.
If you’re a financial advisor, this might sound familiar.
“If there is one thing I want you to take away today it’s that robo advice is going to provide more scalability to your practice, and it’s absolutely not going to get rid of the role of an advisor,” Znavor said.
At the same time, wealth management clients are increasingly using things like mobile banking and are generally more technology savvy—especially younger generations. These things are increasingly expected of advisors. Client behavior is changing, and advisors can use technology to keep up.