Evolving technology and philosophy to widen access to financial advice
The past several years have changed many aspects of everyday life, including consumers’ attitudes toward and relationship with work, as well as the comfort level and familiarity with digital self-service across all ages and demographics. These shifts, combined with the emergence of new types of assets like digital currencies and the impending intergenerational transfer of wealth, have highlighted the need for more widespread, solid financial advice.
Even though there is a notable need for financial guidance, consumers don’t always know where to turn. In fact, a recent Harris Poll survey, conducted on behalf of intelliflo, found that nearly three in five of Americans want financial advice but are not sure where to get it. This rang especially true for younger generations, with 71% of Gen Z (ages 18-25) and 72% of Millennials (ages 26-41) echoing the sentiment.
Without clear direction on where to turn, consumers are increasingly tapping on unaccredited sources for financial wisdom. Only about one in three Americans are turning to registered financial advisors, while more than half are looking to family and, perhaps most troubling, 41% are turning to digital sources, such as social media platforms, blogs and other online platforms. And it’s not just Millennials and Gen Z; 47% of Gen Xers also indicated they rely on digital sources for financial advice.
Despite this significant need and desire for financial advice across the board, most RIAs are struggling to expand their client portfolios. Advisors are already spread razor thin and trying to serve more people with the same amount of resources has proven nearly impossible. The answer lies in both technology and philosophy. Moving forward, a platform-based approach and hybrid advice model will be critical to helping advisors effectively meet the growing demand for advice while simultaneously delivering the convenient, personalised digital experiences consumers expect.
Prioritising a platform
The technology landscape for financial advisors is currently fraught with fragmentation, with countless single point solutions that don’t integrate with one another. This hinders advisors’ ability to offer seamless, digital experiences and innovate quickly. It also is detrimental to efficiency, ultimately reducing the number of clients a single advisor can meaningfully serve.
Instead, it’s time for advisors to embrace a cloud-based platform approach to power the end-to-end advisory experience. Having a single platform that spans the entire advisory lifecycle, in lieu of a collection of bespoke software features from multiple vendors, provides a centralised ecosystem for both advisors and clients to streamline the experience. Digitising tasks with modern technology has proven to enhance internal efficiencies, reduce costs and deepen existing investor relationships while growing new ones.
However, not all platforms are created equal. Priority should be given to cloud-based platforms with open APIs that can facilitate seamless integration with third parties of choice to complement and maintain the front, middle and back office and offer a comprehensive range of functionality. The result is a quicker, more flexible and efficient experience for advisors and clients alike.
Honing in on hybrid advice
While it’s not possible for advisors to deliver a high touch approach to everyone in need of financial advice, offering a hybrid advice model that encompasses a strategic and harmonious combination of digital and human elements can help fill the gaps. Such a model enables clients to benefit from a more comprehensive planning, coaching and experience both online and offline, while allowing advisors to deliver a more robust product suite that can better meet the needs of clients across all stages and sophistication levels.
An important aspect of hybrid advice includes offering intuitive, self-service options. Tools like digital calculators that help individuals compute their financial wellness score and present simple options to invest nominal sums of money are strong first steps, especially for those early in the financial advisory lifecycle. These digital options allow advisors to efficiently engage with and support clients at every stage, while saving time for higher net worth clients with more complex needs.
Such digital options also help meet the rising demand for a more personalised, collaborative advisory experience. Traditional advisory firms are not only competing with each other but also with fintechs and apps such as Acorns and Robinhood as consumers increasingly engage with the retail trading market. And let’s not forget the increasing number of consumers turning to social media for financial guidance. To combat this shift, the advisory experience must be made more collaborative and tailored to the customer’s needs. This is where open architecture and APIs can help, allowing advisors to quickly offer new capabilities and more dynamically engage with modern investors.
Cultural shifts, technology advances and consumer preferences are changing the financial advisory experience. Advisors must be able to meet investors where and how they want to be met, whether that means digitally, in-person or a mix of both. The market is ripe for digital transformation, empowering investors to streamline and optimise processes while serving a broader range of client segments and types from a single, cloud-based platform. A shift in technology and philosophy are key steps in widening access to financial advice, which has never been so critical.