As Investors Seek Tech-Savvy Advisors, Will You Adapt?

Understanding, and embracing, the new ‘consumable’ economy

by Rich Conley

So you’re throwing a dinner party and you’ve determined that the wine selection is absolutely critical to the event’s success. Without hesitation, you feel comforted in knowing that the perfect wine can be obtained through your mobile phone.

With a few gestures of your fingers on a tiny screen, you locate your favorite wine app where you can see what the label looks like, read what other consumers thought about it, and even learn what wine experts worldwide wrote about it. With a click you make the order for delivery to your doorstep for the very next day.

You’re now ready to move on to your next conquest, which of course you will also attempt to solve with your smartphone; after all, the wine experts couldn’t be wrong because “they said they were wine experts.” The digital convenience overwhelms the old-fashioned way of buying wine.

Years ago, you would invest several hours over a number of days and visit wine specialty stores seeking advice from a local merchant and then make the purchase. It mattered to you that you wanted first- hand information on your own terms and you felt compelled to taste each wine and gain the confidence that went along with this decision.

For consumers of any product these days, there is likely a digital option where you can easily learn about the product and acquire it. Today’s financial services options, from banking to wealth management, are certainly gravitating toward that as well.

Investors in practically any age or income bracket these days feel the need to be able to consume an investment service the same way they conduct all their other business, from ordering up plane tickets, making dinner reservations, paying bills or conducting a mobile conference call. The ability to communicate and consume services digitally in rapid fashion is simply now the norm. The world continues to dematerialize and commoditize those things that were previously very tangible.

Consumers seek value and results, advisors clamor to provide it

But you’re an investor and this is about money and life’s journey, not a onetime event like a dinner party. You have expectations on how your financial life should correspond to the rest of your life, which is now fully supported by electronic means. You want advice, information, results and you want it electronically, with the possible option of speaking or meeting with an advisor. The choices are overwhelming.

Advisors these days have to be more savvy than ever with technology offerings to keep pace with the desires of their clients and prospects. Consumers continue to drive the change, which then forces the financial services industry to adapt. Advisors will adapt to meet the need of the tech-savvy investor if they want to keep their clients. Money in motion drives innovation.

While consumers drive change to how they desire to consume a service, on the flip side advisors have to change how they traditionally offer services and how they can charge for those services. In a world where there seems to be an abundance of cheaper options for financial services, traditional fees are under pressure due to competition and innovation from every other industry player who is shooting for a low-cost service in the pursuit of assets.

There is a struggle among advisory firms on how to stand out and be different, and offer the value that consumers seek. The matchmaking between advisors and clients is more complicated now than ever and consumers are more fickle than ever because they feel they have so much choice.

In the pursuit of lower advisory fees, often value, service and results are compromised. When value is compromised, the relationships that bind an advisor and client together become very fragile. So now you see advisors becoming very innovative in their quest to garner clients and offer services that lend themselves to building more and more value and extending that relationship electronically.

Adding value as an advisor goes beyond just being the investment advisor. Consumers can get investments in many places, but having a plan with information to go along with life’s journey to build wealth is that valued service.

Consumers are bombarded with news events, politics and pop culture, which when added together become a deafening distraction that can lead to making uninformed investment decisions. For instance, one day you hear about a bad jobs report on three different news shows, and your phone sends you notifications that there may be head winds coming with the economy.

The next day the Fed reports that the long- term economy looks rosy and jobs should continue to grow steadily for the next 24 months. As a consumer and investor, you feel compelled to do something as the news and financial markets are ripe with volatility.

Highly evolved and savvy advisors today can be a part of that digital experience and act as a filter amongst all the other distractions a consumer faces. In an instant, they can explain what it means specifically to you so you can have confidence that the path you’re on is the right one.

A quick email from your advisor or a timely alert of news from your advisor’s digital portal that you use can be that voice of reason and assurance you’re looking for. You don’t require a phone meeting or a personal visit to gain highly insightful information that accompanies your investment plan with your advisor. You can move on with your life with the comfort that you’re being thoughtfully advised.

Moderation is the key

An abundance of financial information can be obtained and made available to consumers from advisors. The proper amount of information in the right sequence over time is the balancing act advisors and clients must measure.

Now that advisors and clients are digitally connected with their client portals and smartphone apps, the temptation to “over-communicate” is at hand. Too much information or meaningless communication is aggravating. The last thing an investor wants is to be spammed by their advisor. They get enough of that from the wine companies that are emailing them now from that fateful day the wine was ordered.

Moderation is the key to sharing information to remain that trusted advisor.

Unintended Consequences

The tables are turning a bit as well. In the age where digital advising is prevalent, many advisors prefer that their smaller accounts be served exclusively in a digital offering so they can focus on larger clients who have a larger impact on the firm’s business.

There is only so much time in a day for advisors with their own businesses to consider and the unintended consequences of the digital age forces advisors to gravitate towards business that is more rewarding. Meanwhile, smaller business is relegated to less personal service. The ideal scenario is for advisors to have at their disposal an arsenal of channels, both digital and personal, to service any type of business and maintain that quality and valued service.

Advisors might be savvier than you think

Let’s face it, most advisors don’t invent technology, but rather they acquire it and leverage it in order to compete or remain relevant with tech-savvy investors. Advisors align themselves with industry partners who specialize in the deployment of highly sophisticated digital client experiences.

From here advisors customize which information to make available to clients and determine how real-time that data should be. Whether it’s a dynamic portfolio return analysis, holdings and activities data, or possibly an integrated video that highlights your advisor and your portfolio, the arms race to provide more timely and relevant information continues with no end in sight.

In the end, the technology experience for digital advising is a reflection of the advisor’s value, and advisors are definitely thinking ahead to what is next. ◊