Human advisers are in no danger of becoming obsolete.
But it’s worth considering the key technologies and tools out there that enable advisers to stay competitive and evolve into the wealth manager of the future.
An adviser’s technology needs are going to differ depending on where they are in their “digital journey”.
For some, the basics may suffice. Other early adopters may wish to push the boundaries and explore some more cutting-edge tools.
Getting the basics right
Adopt a platform – Retail investment platforms are a single point of entry that allow advisers to invest in a wide range of assets; such as unit trusts, exchange traded funds and personal share portfolios.
Platforms also offer various tax wrappers to suit investment, retirement, or estate-planning needs.
These days, a client-facing web-based platform has become the norm, where clients expect to be able to log in to a secure site and see their aggregated holdings in products and funds.
Engage a good CRM – From managing prospective client leads to effectively servicing an established book, an adviser’s customer relationship management (CRM) system is the cornerstone of their business. It’s used to manage communications, remain compliant, and enable advisers to justify the ongoing fee charged for their financial advice.
As advisers increasingly adopt different technologies, it’s important to consider system integration – particularly into an adviser’s CRM – as it proves critical in reducing the duplication of work such as rekeying information that is held within one system but maybe not another.
Find the software that works for you – Financial planning software is the workhorse of any adviser’s digital toolset and comes in many forms, ranging from goal-based philosophies which calculate the probability of reaching a certain goal, to cash-flow-based philosophies which account for all household income and expenses to calculate surplus or deficit capital.
Tools that dynamically change goals based on the changing needs and circumstances of the client are becoming important as people’s understanding of their holistic financial well-being increases.
Then there are the risk profiling tools which enable advisers to better understand the risk tolerance of their clients’ personal circumstances and timeframe for investing.
The power of risk profiling tools has increased, driven by quantitative computing and including the role complex human behavior plays in financial decision making (along with easy on the eye client-friendly user interfaces).
Now, they range from the basic “conservative, moderate, and aggressive” based on a series of standard questions to gamified puzzles where the client’s profile is assessed in an engaging manner and often yields a more true reflection of their risk tolerance.
Increasingly, an interactive and collaborative process where the client is sitting alongside the adviser while they put the plan together using slick tools is becoming more accepted.
What is important from an adviser’s perspective is the existence of an audit trail of their advice process; consistency in outcomes based on inputs; and, ultimately, client outcomes over their financial lifecycle.
Fund management and research – For those advisers who keep the investment management process in-house, portfolio management and fund research tools are critical for timeous, accurate, and compliant fund fact sheets, as well as portfolio analysis tools that can break down and aggregate industry, geography, risk, volatility, and return metrics at the click of a button.
Taking the next step
Everyone has a mobile phone – As society tends to find more things to do through their mobile devices, financial advice is proving no different.
Sure, mobile may not be as important in the intermediated financial advice arena when compared with direct-to-consumer DIY or automated tools, but it cannot be ignored.
Clients expect to be able to log into their account, view statements, send basic instructions, receive correspondence, or consent to trades and changes to their account on the move, via their mobile.
Get the most out of your reports – Clients today also expect reviews from their adviser to be written specifically for them. The days of generic bulk reviews are numbered.
Customisation of reports, reviews and correspondence is complex and time consuming which is why modular report builders are coming into their own as they allow advisers to choose a template, decide what pieces of information they would like to include, and strategically place bespoke commentary depending on the client’s unique circumstance.
Welcome to the digital age – While documents and forms are quickly being replaced by intuitive web journeys which drive efficiency and accuracy using prepopulated fields and in-journey validation, some advisers or compliance firms still require the completion, signing, and storage of digital documents.
Smart platforms have even done away with the need for signatures by using digital consent principles innate to the web journey and correspondence it generates.
Choose to work with a robot – Once feared to be the massive disruptor to the financial advice industry, D2C robo-advice platforms are proving unsustainable as standalone propositions.
However, when you combine the power of automated investing with the human empathy and strategic insight of a financial adviser, the combination is a formidable force of man and machine and a better outcome for clients.
Getting that 360 degree – With the evolution of an open application programming interface (API) framework in financial services, the elusive single view of a client’s entire holistic financial wellbeing is no longer a distant hope.
Such platforms enable advisers to obtain a true 360 degree understanding of a client, right down to their individual transactions, and enable advisers to influence behaviour away from short-term consumerism towards saving for the long term.
Just make sure that whatever information is included is compliant with local regulation, such as Protection of Personal Information (Popi) in South Africa, and the client has consented to its use.
The future is coming
Seeking the help of artificial intelligence – Financial advice is not like buying a watch online; it is complex, unique to the individual, highly regulated, and a source of much anxiety.
Thus, most chat ‘bots’ that advisers or clients interact with are usually manned by a person behind a computer.
Truly intelligent AI chat bots are few and far between and require significant time spent to ‘train’ them. At present, such bots can assist advisers and clients in a similar way in which Siri or Alexa can help as a digital assistant.
That said, the area is rapidly advancing and it’s always wise to keep an eye on new channels in which one can interact with one’s clients.
No tongues needed – A close associate of AI chat bots, natural language processing (NLP) allows humans to use normal day-to-day language to give instructions.
Where this is truly proving exciting is in the capturing of client applications and instructions.
Visualise this: you speak to your digital adviser assistant and say: “Siri, please will you open a Tax-Free Savings Account for Mr. Msibi, the one in Sandton, and invest ZAR10,000 into 1nvest’s Top40 ETF.”
No forms need filling – not even a web journey is required.
The instruction is understood, the fields populated, and all that is required is for the adviser to review and submit.
Multi-channel compliance – A problem faced by many advisers is the requirement to be compliant, particularly with the rise of mobile and changes in communication preferences.
How does one remain compliant when clients are sending instructions via WhatsApp, during a phone call, on Facebook messenger or even just an emoji?
The nascent technology has far to go but will undoubtedly enable advisers to fit into their clients’ way of working.
The wealth manager of the future is constantly learning, evolving and seeking out the tools that suit their business best.
Technology exists to serve us – and it’s up to advisers to explore the options out there.
This article was written for International Adviser by Aleks Andjelopolj, product manager: platform & product proposition at Inn8.