Charles Jacques is a business development representative at Advicent, the financial planning technology provider of choice for nearly 100,000 financial professionals.
What sets you apart from your competition? With the arrival of the robo-advisor, what are both high-net-worth (HNW) and mass affluent investors looking for from an advisor? What will keep you one step ahead of the robo and above your human counterparts? Undoubtedly one of the biggest draws to attracting new clients is technology utilization.
Embracing FinTech for clients
It is no secret that young people are constantly switching devices from their smartphone to tablet to computer, and they want a financial planning experience that can seamlessly switch to whichever device they prefer in the moment. Clients of all ages are seeking a uniform experience to track their returns and stay on top of their financial future and goal progression.
Clients want a larger role in the planning process and require justification for a financial decision that will affect their future. Being unable to account for today’s tech savvy investors will undoubtedly cause advisors to lose clients to any competition that is leveraging the latest FinTech. Here are three tools that the modern advisor should be utilizing when servicing clients — both mass affluent and HNW.
1. Account aggregation
Account aggregation is not something that every advisor knows they need. However, if their goal is to become the indispensable center of each client's financial world, then they will need to embrace this particular FinTech tool. Whenever I am talking to an industry professional and I mention account aggregation and its benefits, they immediately bring up Mint.com.
Almost everyone is familiar with this personal financial management (PFM) tool and how helpful it is for anyone who is trying to form a budget. The real benefit to advisors from this type of account aggregation, however, is that this cash-flow data can roll up into a financial plan. The cash flow of their checking and savings accounts, the development of their 401(k), their individual brokerage account, and more are all aggregated into one convenient spot.
As well as being displayed to the client, all of this data needs to roll up into the financial plan in order for an advisor to accurately and correctly assess the needs of the client. From a fiduciary standpoint, this data will help the advisor justify their recommendations in the financial plan. Ultimately, by providing the client with a user interface that contains their financial plan and PFM information, the advisor becomes the central hub of the client’s financial life.
2. Progress reporting
Progress reporting is another financial planning technology feature that will help an advisor justify their recommendations. The financial advising process that leads to product recommendations has evolved from a one-time engagement to an ongoing and continual relationship. Following up on and assessing how prior recommendations have served the needs of clients can help improve the likelihood of proposing steps that will fit with the best interests of a client in the future.
Progress reporting allows an advisor to assess how prior recommendations have performed and led to value for clients. This is true of both the value of a specific investment and the “bigger picture” of how the recommendation, when viewed in the context of a full portfolio, have progressed the comprehensive plan.
Progress reporting not only improves the documentation that an organization must maintain to satisfy compliance standards. It also provides visibility and confidence for clients that the plan is made in their long-term interests.
Repeatedly, I have heard from larger institutions that they want an API-based platform for developing their financial planning user interface, and they want to employ those same APIs to increase efficiencies in their own firms by creating bridges between what were once silos of communication.
One of the major advantages of APIs is the flexibility of being able to present the data in the plan to the client in a way that makes sense for that specific firm. An API-based platform is a toolkit for a firm to implement a solution that solves its specific needs, promotes its individual branding, and allows it to seamlessly integrate into existing systems.
There are firms that are utilizing existing client-facing technologies that currently create a very disjointed customer journey. This ultimately leads to disenfranchisement as the client’s journey is disrupted across these multiple interfaces. By leveraging an API-based platform, firms can link these different systems together and present the data in a way that allows the client to enjoy a seamless experience.
Delivering relevant content
Another draw for investors is receiving informative content relevant to the recommendations of an advisor, which allows your clients to feel more involved in the decision-making process.
Utilizing a FinTech tool that allows the advisor to inform their clients on information relevant to their life stages can make the client-advisor relationship much more collaborative. This content must also bridge the technology gap and must be accessible on any device — from the small screen of a smartphone to a tablet to a desktop.
Content delivery indeed does help you justify your investment decision, but also, perhaps more importantly, advisors should utilize tools that always put the client’s needs to the forefront of the process. Utilizing technology that justifies your decisions and clearly explains to your clients why this is the wisest investment decision helps build trust and firmly establishes you as a needed partner.
Clients that know they are being taken care of would have little reason to look elsewhere for advice and might even be more willing to trust you with more of their assets. It sounds cliché, but investors really do want to feel like human beings and not simply a wad of cash to add to an advisor’s portfolio.
In a world quickly being taken over by robos, advisors need to utilize FinTech to stay on top of a mobile savvy client base while also adding value by holistically looking at the investment process and making clients feel like they are in control of their financial destiny. Properly exploiting technology allows for a "white glove" approach and service.
In this whitepaper, learn how FinTech can be implemented to solve the biggest pain points facing advisors in the areas of client engagement, advice delivering, and scaling advice complexity.