Insight Engines Give Advisors A Techno-Boost In Serving Clients

Technology has long been touted as something coming soon to assist financial advisors and make their lives easier.

That day has arrived. Analysts say there is more readily available technology and data-driven aids than ever before.

Here are some technologies readily available to advisors, according to Will Trout, head of wealth management research at the consulting firm Celent:

• The ability for advisors to configure their systems to accept one username and password, also known as a “single sign-on,” is more widespread than ever.
• Powerful customer relationship management and analytics software can be rented for as little as $50 a month.
• Insight engines designed for financial advisors are getting better at mining customer databases to deliver “actionable” information.

Like Google or Microsoft’s Bing internet search engines, advisor insight engines are designed to extract answers from specific queries and hold particular promise for advisors.

The Value of Insights

Here’s one example of what an insight engine can do, according to a recent Celent report titled “Actionable Insights for Financial Advisors.”

Question: Which clients are mostly likely to leave my practice?

Answer: A client with assets of more than $500,000 that withdraws $25,000 or more over three months has a greater than 80 percent chance of leaving the practice in the next three months.

Knowing that, an advisor would likely call the client to see if the relationship is under strain, Trout said.

As every advisor knows, it’s a lot cheaper to repair or rekindle a dormant client relationship than it is to find a new one and the insight software and customization options more available more cheaply than a decade ago.

Other insight engines might suggest a response an advisor ought to consider when addressing a client in a live conversation, Trout explained. One example:

Question: Where’s the best short-term market opportunity?

Answer: Energy and transportation stocks have underperformed the S&P 500, so you, Mr. or Mrs. Advisor, might want to suggest your client to buy on the dip – ExxonMobil or CSX – for instance.

Retaining a client matters to advisors because more than half of middle-market households with $100,000 to $500,000 in investable assets rely on “low advice” providers, such as direct investing platforms and retirement plan providers, according to researchers with Cerulli Associates.

That has helped drive down profit margins, so advisors need to become more efficient at managing the customers they already have.

Whether an account has lain dormant, or the money held in trust on behalf of someone else, there’s all sorts of reasons for advisory practices to drop the ball, Trout said.

But the good news is that small advisories these days have access to technologies nearly as powerful as huge RIAs.

Short- And Long-Term Insights

In the next 18 months, advisors can expect deeper social media integration within insight engines, according to the Celent report written by analyst Kelley Byrnes.

Insight engines tracking and ranking client discussion topics around the new tax law, or retirement and drawdowns, or mortgage deductions should be available -- yielding new clues into client sentiments, the Celent report found.

Chatbots, which are capable of speech, sight, and empathy through voice detection of satisfaction or exasperation, are less than a year away from delivering curated content to advisors, a particularly valuable tool to attract millennials, Celent found.

Longer term, in the next five years, advisors can expect the integration of insight engines into financial planning and trading advice, Celent researchers found.

Financial planning insights would appeal to larger RIAs looking to attract millennial and mass affluent clients.

Incorporating insights to trading advice would help advisors facing new regulatory and compliance challenges, but such insights are likely to be one of the last functions to achieve widespread adoption, the Celent report found.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].