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Six Steps to Go from Tech Indifferent to Tech Savvy
October 30,2015 — BOSTON–(BUSINESS WIRE)–Fidelity Clearing & Custody, a division of Fidelity Investments® that provides clearing and custody to registered investment advisors (RIAs), retirement recordkeepers, broker-dealer firms, banks and insurance companies, today released new findings from the Fidelity 2014 Advisor Insights Study.
The study found that, compared to their peers, advisors who are taking advantage of key technologies, dubbed “eAdvisors,” Had almost 40 percent more assets under management (AUM), were attracting more Gen X/Y investors and were better expanding their geographic reach.1
In addition, nearly three in four (74 percent) eAdvisors believed technology has helped them grow their books of business. To determine use of technology and success, the study looked at how advisors utilized different technology applications – ranging from video conferencing to CRM tools – to support their businesses, what these eAdvisors were doing differently from their peers and the impact these behaviors had on business results.
Investors increasingly desire more of their financial life interactions take place digitally.2 That, combined with an advisor supply-demand imbalance — an estimated shortfall of 10,000 advisors by 20203 – creates the need for advisors to leverage technology to engage with clients and to help improve productivity. This productivity is not only valued at the firm level, it also creates a potential direct positive impact on an advisor’s success. According to the study, using technology, eAdvisors were able to service 55 percent more clients than their typical peers. Though servicing more clients, these clients eAdvisors worked with had 14 percent more AUM.
“It’s no secret that technology can help firms automate processes and reduce errors. What our new research shows is that technology also helps advisors increase assets, attract new clients and grow their geographic footprints. All of that, and eAdvisors are happier with their jobs,” said Tricia Haskins, vice president, practice management and consulting, Fidelity Clearing & Custody. “The downside is that only three in 10 advisors in our study were identified as eAdvisors, which means there are many ’tech indifferent’ advisors today who may not be taking advantage of technology to strategically grow their business.”
Six Degrees of Tech Best Practices
Based on the study, Fidelity identified six categories of technology best practices that eAdvisors were utilizing to help grow their businesses:
- Reach out to clients and prospects electronically
How: Communicating with clients on social media; automating email alerts; promoting practices on social media; providing updates via text message
Why: Engage with new clients online where they are searching for an advisor, stay in contact with clients, reach a broader audience
eAdvisor Advantage: 64 percent of eAdvisors are using social media to communicate with clients versus 12 percent of typical advisors
2. Create a virtual work environment
How: Using on-the-move tools like tablets to view financial information; transacting on mobile devices; using video or online conferencing
Why: Engage with clients at a convenient time and location, quickly respond to market changes
eAdvisor Advantage: 75 percent of eAdvisors are using tablets to view portfolios and reports versus 23 percent of typical advisors
3. Introduce capabilities to enhance operational efficiencies
How: Adopting portfolio management and administrative tools to automate workflows; employing a platform to collaborate with clients; utilizing risk and compliance tools, eSignature, rebalancing software
Why: Streamline daily activities, speed up turnaround times, reduce errors
eAdvisor Advantage: 80 percent of eAdvisors automate workflows and administrative tasks versus 24 percent of typical advisors
4. Provide clients with a dynamic view of their financial situation
How: Using data aggregation and visualization capabilities to produce interactive and/or visual reports, providing a complete view of clients’ assets and liabilities
Why: Provide clients with a visually compelling, comprehensive financial picture
eAdvisor Advantage: 81 percent of eAdvisors are providing a holistic view of client assets; a service that less than half (47 percent) of typical advisors are doing
5. Keep your team up-to-date on investor interactions
How: Utilizing CRM software to store client data and track client and prospect interactions; providing cloud-based storage
Why: Access up-to-date records of client and prospect interactions, easy access to essential details, document storage for clients
eAdvisor Advantage: Eight in ten eAdvisors are using CRM software to track client interactions, while only half (49 percent) of typical advisors do that today
6. Improve the client experience with online access to information
How: Sending eNewsletters; eDelivery of statements and reports; providing online access to statements and reports
Why: Reduce workload, reduce reliance on paper, enhance client experience
eAdvisor Advantage: Almost all (95 percent) of eAdvisors deliver statements and reports electronically versus 72 percent of typical advisors.
“One of the biggest mistakes I see advisors make is the rush to implement technology just because their peers are doing so,” said Haskins. “The key is identifying day-to-day tasks, their business purposes, and then determining what can be digitized for the most benefit to an advisors’ business.”
To learn more about the specific technologies eAdvisors embraced, as well as the key behaviors they exhibited, view Fidelity’s white paper eAdvisors Take the Lead and accompanying infographic.
About Fidelity Investments
Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.0 trillion, including managed assets of $2.0 trillion as of September 30, 2015, we focus on meeting the unique needs of a diverse set of customers: helping more than 24 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 42,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
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1 The research defines “e-Advisors” as the 30% of the advisory population who are more frequent users of technology applications compared to “other advisors” in running their advisory practices. These technologies span all aspects of the advisor’s practice, from prospecting through client service and operations. The group was identified through a k-means clustering segmentation process utilizing the responses to questions regarding advisors’ current usage of a variety of technologies in their practice.
2 “Digging into Digital Advice: Lessons from new advice models mean potential new opportunities for traditional advisors,” Fidelity Clearing and Custody, July, 2014.
3 Sources: Cerulli Associates and Investment News Online.
