Jen McKay and Sharon Wood, Linktank
Financial advisors have been slow to embrace technology and still run largely paper-driven practices, with clients the recipient of advice rather than becoming an empowered partner with their advisor in their financial future.
At the recent Insurtech2020 conference, we asked delegates to estimate the percentage of advice businesses we’ve come across that have successfully managed to harness technology to deliver a truly client-centric experience. The responses were predictably low – and very much in line with the 0% we had in mind.
An optimal advice experience should revolve around the client. Instead, many still look at the client from an inside-out perspective, putting most of their focus on products to offer, operational considerations, and satisfying regulatory requirements. It’s also spectacularly difficult for advisors to efficiently access, maintain, and distribute data necessary for the purposes of analysis, onboarding, implementation, review, and reporting.
Creating a satisfying and fruitful client experience should take precedence over all of these considerations, because, at the end of the day, the back office activities are the hygiene factors in financial planning practice.
It all comes down to giving a client choice: the choice to engage in the format they choose, via the channels they prefer, and as frequently as they desire.
To deliver this level of client experience takes significant time and energy, something that financial planners don’t have if they are bogged down in the admin. That’s why we believe technology, well-chosen and implemented effectively, becomes a critical client-relationship enabler. It systematically takes care of the operational and regulatory aspects, leaving time for the most important part of the job, crafting an outstanding client experience.
But selecting appropriate software isn’t enough – it’s equally important to think about the data trail. How will information enter and leave all the applications and platforms it needs to? Lack of integration between internal, not to mention external, systems remains a key frustration for any advice business. Advisors should be considering both software and product providers’ attitude to integration as a key criteria for support.
An ideal model should generate high-value analytics, enable more accurate predictability and thus intuitive advice, and ultimately put you in a position to offer a quality financial planning service to more people that includes enabling self-service or guided service to those who want it.
Fast forward to the ideal: a ‘hybrid’ model that employs automation where it will be most effective, carving out time for you to put your financial planning and human, relationship-building skills to greatest effect. It might look something like this:
- The client is owner of his data and thus able to access his own financial information in a user-friendly and meaningful manner.
- The client is able to self-service to the point where he needs his financial advisor’s input.
- If the advisor has built a trusted relationship, the client instantly shares the data needed with the advisor before meeting either physically or virtually.
- The client can also wait to authorise access to his data until after a relationship of trust has been established.
- The client can revoke access to his data at any time because, well, it’s his data to share.
- The client’s digital financial data feeds into the advisor’s financial planning software platform of choice.
- The advisor uses the data and his understanding of the client to provide that full rounded and tailored client experience because the client has become front and centre of the conversation.
According to Linktank’s latest advisor technology survey, most advice businesses remain largely paper-based, with manual business processes
That’s the stuff of fantasy, though, isn’t it? For starters, the perceived owner of financial data is not the client. It’s not possible for a client to access a broad enough range of his own aggregated financial data without intermediation or product provider bias and, realistically, part of the advisor’s value proposition still rests on the complex collection and processing of this information.
Advice businesses, thus, by their own admission, remain largely paper-based and manual and technology is seen as grudge purchase.
Latest survey results confirm the supposition that most advisors do not offer their clients any kind of online portals where they can access financial information or engage with their advice team.
The appetite for serving clients online or offering them the option to self-service is low, partly due to the challenges wrought by the persistent necessity of maintaining client data manually.
Although it’s true that advisors need to change this attitude to technology in order to stay relevant, consumer demand and legislation will eventually force it one way or another. In addition, however, we need much greater appetite from product providers and industry technology providers to make integration and data sharing – with the end-client in mind – a core concern.