Euan Sneyd considers what the rise in digital technology will mean to financial advisers and their clients, while also exploring some technology tools that can be implemented within an advice practice to streamline its offering.
In the world today, digital is the norm, and it’s how clients expect to interact with financial advisers.
Clients expect to have the same digital experience they are already having in many other areas of their lives, such as with social media platforms like Facebook, the ease of ordering a car through Uber, through to online shopping. This increasing ease that clients are now experiencing in their everyday lives, is becoming the norm of what they expect with services today, including their expectations with financial advice.
When looking at industry research (Deloitte Digital and Salesforce Financial Services: Restoring Trust in Financial Services in the Digital Era, 2018), clients are telling the financial services industry that we are not meeting or exceeding their expectations. In fact, only one in three clients say their interactions with advisers is exceeding their expectations.
Overall, when it comes to the financial planning process, clients have high digital expectations. According to the research:
- 53% of clients believe the digital experience with their financial providers needs to be improved;
- 45% expect to be able to access customer services via text or social channels;
- 59% expect to receive proactive advice and alerts from their financial provider; and
- 45% prefer chatbots as their primary mode of communication for basic enquiries.
Why going digital makes sense
In addition to client expectations that digital is now the norm in their overall client experience with the financial planning process, there are two key areas for advisers to consider when looking at the digital offering within their business.
Firstly, your digital offering needs to be about a positive client experience. Clients are expecting a richer experience with their adviser that extends beyond face-to-face interaction, or via traditional modes such as the telephone or email. By using digital platforms, advisers can offer a more personal experience to their clients by better understanding what their clients want.
Secondly, a digital offering provides greater operational efficiency to the planning business. Technology and digital solutions offer the ability to improve the ways in which advisers have traditionally done things within their business.
From these two key areas emerge a range of by-products, such as improved compliance, better quality advice, more resilient business performance and increased profitability, which will be discussed further on.
Technology: Friend or foe?
Financial advisers should consider technology as an opportunity for their business, rather than a challenge.
Currently, there are two types of advice businesses operating in the market:
- Those businesses that are the early adopters and are looking to improve their operational efficiency, improve the client experience, and are exploring the availability of technology, particularly low cost technology, to implement within their business; and
- Those businesses that typically hold back and wait for others to test emerging technology and business solutions, before implementing them within their own business.
What gives these early adopters the advantage is they are setting the benchmark for what the base client experiences. They are also dictating the direction of what is going to be delivered to clients in the future.
In contrast, with the second group sitting back, they are waiting for the perfect solution to be developed. However, in reality, no technology solution is ever going to be perfect for a business. While these solutions will do the vast majority of what an adviser wants, there are always going to be gaps with these solutions.
However, I believe this second group really needs to move faster in their adoption of these technology solutions. By holding off, we are starting to see a disconnect between the ‘haves’ and ‘have nots’ in terms of how many businesses in the marketplace are actually performing more efficiently and profitably.
Advice business tech tools
The following are examples of technology tools that can be easily implemented within an exisiting practice.
Emails, newsletters and marketing automation
What can you do with it?
- Segment and target specific types of clients.
- Run marketing campaigns triggered by a specified event.
- Track, report and analyse client activity.
Only 51% of advice businesses actually personalise their broadcast communications to their clients, such as beginning with ‘Dear Sally…’. Simple things, like personalising your communications, is an easy way of improving the client experience.
In terms of business communications, there are solutions available in the market that allow advisers to segment their client base, enabling them to specifically target who they are wanting to talk to. For example, during periods of market volatility, you can send out emails to clients who need an update, or when you are doing managed account changes, you can communicate to clients though these platforms.
When you consider the most recent findings in Business Health’s Future Ready VII Report, which was released last year, the report found that only two-thirds of advisers are communicating to their A list clients, who are their high value clients, less that 10 times per year. Only one-third of advisers are communicating to their A list clients over 10 times annually.
In times, like now, where the industry is receiving a lot of negative coverage by the media and the markets are somewhat volatile, clients are potentially more unsettled and are seeking reassurance from their trusted adviser. An effective communication strategy is a great way of getting in front of clients more often and to demonstrate your value.
For those advisers who are communicating with their clients more than 10 times per year, they are recording a 31% increase in profit. So, communicating with clients more often is a very important way of demonstrating your value and ensuring that trust is maintained with your clients.
Communication tools include:
- MailChimp.
- XPLAN.
- Campaign Monitor.
Virtual meetings
What can you do with it?
- Meet with clients anytime, anywhere.
- Satisfy your time-poor and tech-savvy clients.
- Store meetings for compliance purposes.
There has been a strong uptake by advisers with video conferencing tools for clients. Video conferencing is a quick and easy way to have a catch-up or review meeting with clients at anytime and anywhere.
Virtual meeting tools offer a range of services, such as screen sharing, enabling advisers to more easily collaborate with their clients.
Approximately one-third of advice businesses are offering video conferencing with their clients. Zoom and Skype are examples of video conferencing tools. However, the biggest group of advice practices that have taken up this digital solution are newly established businesses that are 10 years or younger. In contrast, businesses that are older than 10 years are recording a much lower uptake of these digital tools.
Virtual meeting tools include:
- Skype.
- GoToMeeting.
- Zoom.
- SuiteBox.
Surveys, reviews and ratings
What can you do with it?
- Get to know your clients better.
- Capture client feedback.
- Benchmark your service levels against other providers.
- Identify areas for improvement.
Surveying your clients also goes to the heart of effectively communicating with your clients. It’s about understanding what your clients are thinking.
According to the Business Health Future Ready VII Report, only one in three advice businesses are actually asking their clients for structured feedback. Of the 33 per cent of businesses that are taking feedback from their clients, 79 per cent are using surveys, like SurveyMonkey, to directly ask their clients for feedback. By doing so, these businesses are recording a 27 per cent increase in practice profitability.
This profit increase is a result of those businesses getting to know their clients better. They’re understanding and positively responding to the feedback their clients are giving them; they are benchmarking their service level from year to year; and they are also targeting and fixing problem areas identified within their business.
Digital tools, like SurveyMonkey, are a great way for advice businesses to set up regular surveys to better understand their clients needs and expectations.
In addition, many advice businesses are also rolling out post implementation and post meeting/review surveys, where clients are encouraged to provide feedback on their experiences with the adviser and business. This can be a valuable way of receiving an independent assessment of how the business is tracking with its clients.
Survey tools include:
- SurveyMonkey.
- Adviser Ratings.
- Google reviews.
Client portals
What can you do with it?
- Have a central point of information for clients.
- Improve client engagement.
- Help with compliance and sharing secure documents.
Client portals are invaluable in enabling clients to access their information and to interact more closely with their adviser during the advice process.
Approximately 60 per cent of advice businesses are currently either using some form of digital tool to directly demonstrate planning strategies to clients or are offering a portal for their clients to access shared information, as opposed to emailing information to their clients.
An example of such a tool is myprosperity. Powered by live data feeds, it allows clients to manage everything from cashflow to budgeting, property, tax and estate planning.
Client portal tools include:
- FinPal.
- myprosperity.
- Xeppo.
Cloud storage and shared technology
What can you do with it?
- Work on files anywhere.
- Simplify document sharing and collaboration.
- Download to computers or mobile devices.
Instead of emailing through unencrypted ROAs or SOAs, another way to share information with clients is through cloud sharing. However, the ability to cloud share will depend on the licensee. While some licensees allow it, others have much more restrictive standards about where an adviser can store client information.
Currently, 37 per cent of advice businesses are doing some form of cloud sharing. Again, it tends to be advice businesses that are 10 years or younger that are leading the adoption of cloud sharing.
Cloud storage allows advisers to share files and documents both internally within the business and externally with clients. It enables real time collaboration of documents and allows clients to easily download files when they need to, compared to searching for an email or a mailed hard copy document.
Dropbox is a common tool used by advisers, with others including Google Docs and myprosperity.
Cloud storage and shared technology tools include:
- Dropbox.
- Google Docs.
- myprosperity.
Digital workflow and integration
What can you do with it?
- Link systems together to improve business efficiency.
- Analyse workflow and create reports.
- Capture notes or ideas on any digital device.
While 69 per cent of advice businesses have some form of way where they can set up and track their internal workflow processes, only 32 per cent of those businesses have that workflow integrated with other parts of their business.
Linking and integrating your systems is key for business success today. By doing so, it will help you to better analyse your workflows, it will assist you to create reports, and help you to understand the trends happening to your business and with your clients. In addition, digital workflow and integration will also help with the training and management of your staff.
Zapier is an example of a web automation app, which sits across various applications that businesses are using, to help automate parts of an adviser’s business. Zapier supports hundreds of apps, and enables businesses to mix and match triggers and actions to automate just about anything.
Digital workflow and integration tools include:
- Zapier.
- Evernote.
- IFTTT.
Project, activity and task management
What can you do with it?
- Communicate more effectively with your team.
- Get greater transparency of projects.
- Optimise resource allocation and delegate tasks.
When it comes to project management, the key to doing this in a streamlined way is using the right technology solution that allows you to do it in a smarter way.
An effective project, activity and task management technology solution will enable you to more effectively communicate with your team, provides greater transparency in what you are doing, and allows you to better manage the projects you are working on.
Slack is an example of a cloud-based system that offers a single place where your team can come together to collaborate, where important information can be found by the right people, and where your tools pipe in information when and where you need it.
Project, activity and task management tools include:
- Slack.
- Trello.
- Evernote.
Managed accounts
What can you do with it?
- Enhanced client engagement.
- Improved client investment outcomes.
- Reduction in back-office administration.
- Improved risk control.
Managed accounts are an investment solution that has enabled many advice businesses to improve their operational efficiency and the overall client experience.
Managed account tools include:
- Managed accounts on platforms, like FirstChoice.
- Financial Express.
What will the future look like?
With so many different technology solutions available to advice businesses, how do planners successfully navigate the range of choices available?
The following are my top five tips for advice businesses to implement technology changes within their practice.
- Stay up to date
Attending relevant technology and industry conferences, as well as subscribing to quality newsletters and publications, is one of the best ways for advisers to stay up to date with what’s happening in the industry.
However, as a word of caution, don’t get too excited when you learn about something new and are keen to implement it immediately. Instead, start a process of ‘test and learn’. Firstly, gain a full understanding of what the technology does and can provide to your business. Then test the technology out on a reasonably small scale before you roll it out across your business.
By doing so, you can make an informed decision and iron out any problems, before fully implementing the technology in the practice.
- Encourage your team
When it comes to technology, younger staff members are likely to be more technology savvy than older staff. Therefore, younger team members will be the key to successfully implementing any technology solution within a business.
So, ensure these younger staff members are part of any projects and empower them to find the right technology solution for your business, including how to implement that new solution within the practice.
As a business owner, don’t try to be all things to all people within your business. The key is to delegate these types of tasks, and importantly, use delegation as a way of encouraging younger staff to step up.
- Set clear outcomes
This is all about setting clear outcomes and expectations of what you want the technology to do. It’s about having smart goals. Be specific in your expectations, ensure you appropriately measure the outcomes of the technology, and have a clear timeframe for the implementation of new technology.
And remember, you need to continually assess the benefits of your systems. You can expect that every five years or so, you will be replacing whatever system you are using, unless it’s had a significant upgrade. Technology changes rapidly, so you need to keep up with these changes.
- Be client-centric
Being client-centric is all about keeping the client at front-of-mind of everything you do. Make sure your business outcomes are client-centric. Ask yourself: ‘How will this change serve my clients better?’
- Integrate solutions
Ensure your systems are integrated. Currently, many advice businesses are running isolated technology solutions. So, if you can’t get your technology solutions to integrate with others, then look for technology solutions that will.
Euan Sneyd is National Manager - Institutional Solutions at Colonial First State.