Tech Train Leaving Station for Financial Advisors


Tech Train is Leaving the Station for Financial Advisors

All aboard the WealthTech Train.

The train is leaving the station for wealth advisors who are looking to boost their AUM in the wake of the COVID crisis. As we recently noted in our white paper “The Wealth Marketing Round Table: Q3 2020 Outlook,” wealthy clients are more likely to seek the guidance and leadership of a new advisor after the recent financial crisis, particularly first-time clients. The Do-It-Yourself crowd in 2008 quickly realized that a professional is more likely to help them achieve their long-term goals than going it alone. However, one of the key challenges for wealth advisors as they build their AUM and take on new clients is keeping their existing book satisfied on time commitment and regular insight.

As a leader in wealth tech and innovator in client communications, we’ve long argued that technology is the greatest facilitator of boosting AUM and engaging clients with meaningful insight and analysis. So, it’s no surprise that many other thought leaders are climbing aboard the train and arguing that communications platforms like the one offered by ReachStack can dramatically increase the satisfaction of clients, improve advisor communications, and boost assets under management.

The Trend Is Your Friend

COVID-19 has radically changed the corporate environment for wealth management firms, forcing them to adapt on the fly and adopt new technologies to facilitate a seamless transition from the pre-pandemic world. Even before COVID, firms required technology to reduce corporate costs, capture market share, fulfill customer expectations, and address regulatory pressures. A new report from Broadridge notes that many companies plan to scale back their broader digital transformation over the next two years (the expected recovery timeline for the economy). However, the one area where companies won’t slash budgets – and will instead bolster their spending over the long-term (57% of respondents) – is in automation.

As JD Power confirms in a separate report, wealth firms are making massive investments in advisor workstation technologies that incorporate automation to help bolster client communications and maximize their ability to win news business and grow their book. The 2020 U.S. Financial Advisor Satisfaction Study sees extensive investments in technology that helps advisers mine market and customer date, service account-related requests, and integrate artificial intelligence into a single platform.

“Advisor reliance on technology to manage all aspects of their practice has been growing for many years, but it has been accelerated considerably during the COVID-19 pandemic,” said J.D. Power senior director of wealth and lending intelligence Mike Foy. “While firms are investing heavily, many have been missing the mark on delivering technologies that truly meet advisor needs. In fact, just 48% of advisors say the core technology their firm currently provides is ‘very valuable.’ That needs to change if firms want to win the talent war.”

The integration of advisor-technology will be critical to the growth of AUM. In Canada, alone, advisors dedicate up to 9% of their time prospecting new clients, according to Natixis. That figure could increase due to rising competition across the wealth management space. To maximize their time, advisers will require greater efficiency in their work, particularly in marketing and communications with new and existing clients. Financial executives noted in a survey by Broadridge in June that the opportunities for greater efficiencies in prospective will be found in “digital interaction and the cloud.”

However, too many of these reports and “thought leadership” pieces fail to explicitly name the specific channel that will help these advisors gain business.

AI and the Next Generation of Email

The buzz across the industry continues to center on the value of artificial intelligence in terms of customer planning and information gathering.

“Predictive analytics tools, such as AI-driven technologies to predict client needs or identify at-risk clients, still have relatively low levels of adoption among advisors,” the company recently wrote. “However, when they are used, they have a powerful positive effect on advisor satisfaction. Just 9% of advisors currently use AI tools, for example, but advisor satisfaction with technology is 95 points higher (on a 1,000-point scale) when they use AI tools and find them valuable than when they rely only on basic planning tools.”

Yet, too often we don’t hear enough about the importance of integrating artificial intelligence into existing email communications. While everyone is chattering about the prospect of automation and client communications, they never explicitly note that email is the most effective channel for client communications. ReachStack notes that wealth management clients have an open rate with their advisors that ranges as high as 85%. Not only is it the most effective communications channel, it also provides a treasure trove of client data that can be used for prospecting to win new business and boost confidence and satisfaction among existing clients.

When advisors combine cutting edge AI tools – like the ones offered by ReachStack – help wealth advisors mind an endless pool of data that fosters a greater understanding of clients’ preferences on frequency of communications, investment styles, risk tolerance and more.

The ability to harvest data from email – the most reliable source of communications and open rates from wealth clients – provides better predictability on client engagement as well, helping wealth advisors tailor their messaging to their needs in a fraction of the time.

Thinking about taking the next step?