By Cyril Tuohy
Yes, it’s is all about the relationship — the relationship an advisor has with his or her technology, and how that relationship in-turn affects the vital bond between a financial advisor and a client.
For a clue into how deeply technology has permeated the lives of investors and the expectations they have with regard to a financial advisor’s adoption of technology, consider this statistic revealed recently by Fidelity Investments.
More than one-third of investors said they would switch if advisors were not using technology to enhance their services, according to Fidelity. For young advisors steeped in apps and tablet hardware, the finding may be no surprise.
For advisors who’ve gone through many technological implementations, sometimes with mixed results, or for advisors who still rely on tried-and-true techniques of pen and paper, the findings reveal that Generation X and Y clients are prepared to mete out swift justice in the face of technological inertia.
“Investors today expect technology woven into everything they do, and that includes their financial advice,” Ed O’Brien, senior vice president and head of platform technology for Fidelity Institutional, said in a news release.
Many of today’s 30-somethings don’t just expect technology everywhere. They have come to depend on it, said Caleb Brown, a principal with New Planner Recuiting, an advisor recruiting company in Athens, Georgia.
Brown counsels advisors looking to new advisory talent to make sure prospects are computer literate, preferably with financial planning and retirement software.
His firm subscribes to the bring-your-own-device (BYOD) model and gives new employees a stipend to go out and buy what they want.
“I say, ‘Here's a specific amount of money and here’s the job you need to get done, go out and get the technology.’ It gives them a good sense of autonomy,” Brown said.
The findings about the use of technology were reported by Bellomy Research for the 2013 Fidelity Insights on Advice survey. Bellomy researchers queried 813 affluent investors last May, and 813 advisors last August.
Advisors aren’t tone-deaf to the rising expectations surrounding the use of technology, far from it. For advisors, it’s not a question of trading old habits for newer processes, but about striking the balance that melds the human touch with technology, according to O’Brien.
A recent Fidelity survey said as many as 77 percent of advisors report they are making an effort to increase their use of technology in their practices, and 75 percent of advisors felt they needed to use the latest technology to grow assets among younger clients.
Although advisors are attuned to the need to ramp up technology efforts, 95 percent said they see the challenges in integrating the technology in their lives.
Many advisors aren’t always sure what kind of technology is best for them, how to configure a new technology platform, or integrate new features into existing systems. Technology upgrades are often expensive.
Younger clients aren’t going to give advisors so much as a second chance to nail down new technology improvements on the first try, and young investors are more than happy to take their assets to another advisor at the click of a mouse.
Without a doubt, the relationship that Gen X and Gen Y investors have with their advisors is going to be a very different relationship than the one advisors have with World War II or baby boomer generation clients, according to surveys.
One of the biggest changes that advisors can expect with their technology is around collaboration with clients, O’Brien said.
Recent technology developments have helped make their relationships with clients more collaborative, according to 63 percent of advisors surveyed, and adopting collaboration tools are seen as an important step for investors who espouse the “validator” model, the Fidelity survey found.
Under a validator model, in contrast to a delegator model, investors are more likely to make decisions on their own before turning to an advisor to validate their choices, or seek a second opinion from the advisor.
Advisors have by and large grasped the revolution in mobile computing and many are interested in having their desktop computers accessed from anywhere at any time using tablet or smartphone hardware, the survey found.
Virtual trade conferences are joining the list of technology-fueled webinars and webcasts as a way to reach and inform clients. The first online-only shows targeted at advisors started to appear last year.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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