It wasn’t long ago that financial advisors had privileged technical access to markets. An advisor, or broker as they were more commonly known, was a conduit between the seemingly arcane world of exchanges and retail investors. Trades were executed by a proprietary trading desk that took wire orders (or even paper slips!) from the brokers. Even then, the technology gap between retail investors and the market was more like a yawning chasm without a bridge.
See the Original Blog Post
Fast forward to today and the technology landscape looks very, very different. Mass market brokers have moved online, with the likes of Schwab and Fidelity providing low commission trades. For the DIY wanting to put their assets on cruise control there are robo-advisors with easy to access asset allocation portfolios.
As it sits today none of these technologies make advisors obsolete. Robo-advisors aren’t a replacement for financial planning. Discount brokers provide little or no guidance and are their advanced execution is fraught with peril for amateurs. In other words none of these technologies are not even close to replacing quality advisors, but they do threaten the value provided by a financial advisor who is behind the times.
Given that these discounted trading technologies are reducing the traditional sense of value provided by advisors it makes sense that advisors are seeking ways to demonstrate worth beyond the trade. Many of the top producing advisors today are leveraging systems and technologies that offset the threat of digitized trading and enhance value-add and client retention.
Where does this leave the investor? The DIY investor can easily adopt robo-advisors and online budgeting just as easily as they adopted the dot.com discount brokers back in 2000. Many advisors will be happy to clean up their book and rid it from high attention low yielding clients’, but will they soon feel the pinch as larger clients choose to move to these platforms?
Financial advisors often begin client interviews with a risk or profile questionnaire, which is where the advice provided by robo-advisors starts and ends, whereas at this point in the process the evolving advisor is just getting started. However, it’s amazing that in 2015 this part of the advice process all too often still relies on paper and pen questionnaires followed by manually entering this same data to your system.
Many advisors today are simply unaware of how the clients other assets are performing and they rely on out of date paper statements, further reducing the perceived sophistication and value provided by financial advisors.
What clients will continue to pay for is advisor-driven advice that incorporates holistic and sophisticated planning with a comprehensive understanding of the client situation, and all backed by and based on live up-to-date client data.
Today’s top financial advisors have figured out that by adding the right technology to the client discovery and engagement process they can create deeper and more interactive relationships. These technology enhancements uncover hidden pools of assets and
defend advisor fees through increasing the level of perceived service
and adding advisor-branded touch points to the client experience. Best of all, they can offset the loss of perceived value caused by the rise of discounted online trading and robo-advisors.
The advisor of the future is making the evolutionary leap today. These forward-looking advisors continue to respond to the rise of discount brokers by ridding their book of high attention and low-revenue clients. At the same time “A” clients are rapidly becoming disenchanted with advisors that do not offer the value of holistic online access. Top advisors and their best clients are rapidly coming together around holistic planning that extends beyond risk profiles and investable assets, and the advisors who embrace this new perspective will survive – and prosper – during this ongoing technological revolution.