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Surfing the Technological Tsunami: How your practice can thrive in the digital economy

The Financial Advice industry faces a “technology tsunami” bound to bring sweeping change, according to Market Logics CEO George Hartman in a recent interview. Robo-advisors, video-conferencing, cloud storage and CRM are all reshaping the way advisors work. Those positioned to “ride the tide” will thrive in a digital economy, Hartman added, while those who don’t may find themselves sinking in race-to-the-bottom price competition.

As the financial advice industry consolidates and margins thin, practices need ways to up their game. It’s tempting to see FinTech as the enemy. But it provides a vital avenue for achieving profitability in a lean business environment.

Knowing where (and how) to allocate your valuable time and finite tech budget can be hard. To help you sail through difficult waters, we identify top trends and products — and how to turn them to your advantage.

The rise of the digital advisor

In the olden days, advisors relied heavily on personal networks to drive referrals. But that model is changing. Today, “people are far more willing to go to Google for a recommendation than to get a validation from a friend,” said Hartman.

Clients are also increasingly demanding the same convenience they get from online banking with their investment services. This has led many to choose “robo-advisor” sites such as Betterment and Wealthfront over traditional advisors. These portals, with automated, algorithm-driven financial planning, are especially appealing to younger, tech-savvier investors seeking rich digital experiences and more personal control over their investments.

Embracing a hybrid service model

While some speculate robots might one day replace advisors, according to many analysts and surveys, that’s not in the cards. Clients still expect – even demand – meaningful relationships with their financial service provider.

Indeed, a recent survey by GfK found just 10% of respondents saying they would be likely to trust a computer algorithm more than a human for financial advice. Another survey found among millennials (the demographic most likely to use a robo-advice platform) 82 percent said they would appreciate more personal meetings with their investment adviser.

What seems to be happening is that the industry is transitioning towards what Managing Director for Accenture Wealth management Kendra Thompson called a “hybrid” advice.

“The next generation of clients,” Thompson wrote, “want the flexibility to take charge of their finances but have a skilled and experienced financial specialist in the background. Using a hybrid model means advisors better service clients and using a robo-platform, are freed up to focus on value-adding relationship management activities.”

Thompson adds that companies embracing a hybrid model can grow their book of business and expand service offerings, while freeing up advisors to focus on client care – justifying higher fees.

Thankfully, there are plenty of FinTech solutions with white labelled products you can skin with your brand name and logo – so your clients won’t notice the difference. These include Trading Front, NestEgg, Envest, Betterment, Wealthsimple and more. Each solution offers a combination of portfolio and practice management, plus reporting software and client onboarding tools. (Check out this product comparison for more detail.)

The tricky part is finding the right software for your client needs and way of doing business. Thinking ahead about your service model can help you avoid costly mistakes when making big procurement decisions. Accordingly, you might follow one of these three service models or improvise something tailored to your unique circumstances.

Achieving personalization at scale

One additional consideration is how to achieve personalization at scale. The thing about relationship building is that it is really hard with the high number of clients FinTech enables.

This is where your CRM fits in. With CRM, you can track all your client and prospect information on a single platform, ensuring you always have access to their preferences, history and status. That way, whether you’re calling them on Skype or meeting face-to-face, you’ll have all the information you need to deliver personalized client care.

More than contact management, a CRM also lets you generate reports, automate follow-up on relevant client touches, segment prospects for marketing campaigns, and generally do other things that make your life easier. A CRM configured for Financial Advisors will save you considerable time and money on setup, while simplifying KYC, financial planning, tracking of client family members, and much more.

The bottom line

FinTech is rocking the financial advice industry, creating winners and losers. Those willing to embrace change stand to profit from it. By automating repetitive processes and calculations, FinTech can free up advisors to focus on client care. This can lead to strengthened relationships, enhanced retention, and higher fees through added value.

Want to learn more on how a CRM designed for Financial Advisors can help you build stronger client relationships? Take a look at our short video demo.