Outdated Tech is Costing Advisors Clients and Prospects

The firm with a new study on this topic answers our questions on how advisors can more proactively approach technology.

By Jerilyn Klein

If assessing your firm’s technology hasn’t been a recent priority, it’s time to put it near the top of the list. More than half (52%) of advisors said they’ve lost prospects and 25% said they’ve lost existing clients because their wealth-management technology failed to meet expectations.

That’s according to a new report from Advisor360°, a Massachusetts-based provider of integrated technology for broker-dealers and other wealth managers.

More up-to-date technology can help business, the survey also found. Four out of five advisors with technology that is mostly modern (from 2018 and later) reported a 6% increase in the inflow of new-client assets under management in the last financial year. This compares with just a 1%-plus increase in assets for 52% of the advisors whose technology dates back to 2017 or earlier, the survey noted.

Advisors who say they have modern technology are also 33% more likely to get client referrals compared with the advisors who say they need a tech upgrade. Among the survey’s 300 respondents, 39% said they need a tech upgrade.

Still, even newer technology may not be getting the job done as well as it should. Although 58% of the respondents classified their technology as “modern,” only 3% described it as “integrated and innovative.”

“Technology can be a game changer for advisors who want to grow their business,” Richard N. Hart, senior vice president of corporate development at Advisor360°, said in a statement. “Firms that can’t innovate to today’s standards or don’t stack up to peers are leaving money on the table.”

More survey data can be found in Advisor360°’s inaugural “2022 Connected Wealth Report.” Rethinking65 also asked Hart about how advisors can improve their technology. Here are his responses:

Jerilyn Klein: Where should advisory firms start modernizing their technology?

Hart: Firms should really focus on where their data resides and the functions which utilize that data. Ultimately for a modern technology stack, it generally starts there. But they should also focus on what an advisor does all day, and then work backwards from there.

Firms should ask themselves questions like: Do we offer SEC/Finra-compliant text messaging? Can our advisors have conversations with clients or prospects on a mobile device — for example, performance reports or updates on portfolio performance digitally? Do our advisors have the ability to automate address changes, money requests, additional account openings, easily and straight through.

Klein: What are the important places to look for gaps in technology?

Hart: Gaps generally exist in new lines of business. For example, alternative asset classes or insurance products generally do not have the most automated processes, which in turn leads to client dissatisfaction with manual paper-account opening experiences.

Klein: What are the must-have features, even if advisors aren’t in a position to overhaul all their technology right now?

Hart: Full automation of workflows. They create time for advisors to either service clients or prospect for more clients, which can help them build a bigger business.

Client Portal. During Covid it became critical for advisors to offer the ability to give advisors information on their accounts via a client portal, as the in-person channel just was not available. Post Covid, this is becoming a must-have as clients expect most if not all interactions digitally, which requires in some instance a compelling client portal. Dorothy – would you change digital to digitally?

Klein: Anything in particular that could be helpful for working with retirees?

Hart: Retirees have many worries now – cash flow needs, a market that is down 20%, and rising interest rates. Having a well thought-out, thorough financial plan will help retirees understand their spending and also what income their assets are producing. Retirees’ needs are also different from a technology perspective. While Gen X and millennials almost demand everything be available online, most retires still want that in-person service. Video calls work well, yet perhaps an advisor who makes a house call with information on a laptop or mobile device is a more compelling value proposition given the market we are in.

For its “2022 Connected Wealth Report,“ Advisor360° surveyed 300 financial advisors and executives at large broker-dealers, registered investment advisors, and bank trust companies across the U.S. The telephone- and email-based survey was conducted during September 2022 by Coleman Parkes Research on behalf of Advisor360°.





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