Tech innovation will drive your wealth management practice to greater success

There has never been a better time to work in wealth management.

The industry is undergoing exciting change, and demand for our services is high, particularly at the community level. However, although change is exciting, we are also seeing rapid disruption driven by new technologies, evolving investment trends and demographic shifts set against a backdrop of economic uncertainty, increasing cost pressures and new risks.

Financial institutions and insurance providers offering wealth management services are well-positioned to win as they can provide a holistic wealth picture for clients. As a financial advisor, you can provide a wide array of services that work together for an integrated financial offering and simplified experience for clients.

That said, as we’ve seen throughout 2023, clients expect more from their financial advisors. For example, Cerulli recently released a study showing more than 80% of young, affluent investors choose to use a different advisor firm than their parents, suggesting they are more likely to switch advisors for a firm with a client experience in line with their expectations and way of doing business in line with their mobile nature.

It’s time to transform how you think about innovation! To capture and serve multi-generational households, institutions must adapt or face losing market share to competitors. This means committing to a significant annual investment in tech to maintain and enhance digital client experiences, competitive platforms and cost-effective services. In addition, true innovation requires investing more than just capital. It also means investing your time in introducing capabilities and services that exceed clients’ expanded expectations to differentiate your offering in the marketplace.

As you consider how you will invest in new digital solutions and tech in the new year, I suggest looking at these areas to help identify how you can continue to innovate in this disruptive market.

For advisors:

Find ways to serve a broader market. The face of wealth is changing. The U.S. is experiencing a great wealth transfer, with about $16 trillion expected to be passed down to millennial and Generation X heirs over the next 10 years, according to an analysis by The New York Times. This presents an enormous opportunity to engage a new client population, particularly if they are the children of current clients or are already coming to you for banking or insurance services. These younger generations face unique challenges and can benefit from financial guidance as they look to secure familial wealth and leverage it appropriately for their own family. A financial planning framework that highlights your knowledge, expertise and empathy typically goes a long way with this important demographic.

For institution leaders and decision-makers, here are two other things to think about.

Invest in tech that makes work easier. Remember the adage, “Work smarter, not harder.” Tech should be an enhancement to our work, something that streamlines workflows, improves advisor-client relationships and integrates wealth management solutions into single-service options. Efficient workflows focused on automating and outsourcing operational and administrative tasks free up time for advisors and allow them to provide higher-value services to clients. When your wealth management technology integrates with your firm’s core systems, you can facilitate a user-friendly and holistic experience for every client your business serves.

Choose the right partners. Each institution is unique, requiring the right combination of expertise, technology, processes and services to function at maximum capacity. Whether your institution handles all wealth management operations in-house or delegates these to outside vendors, everything must integrate and work seamlessly with the rest of the business. Anything less is holding the institution back from realizing its full capabilities and opportunities to scale. Make sure you are leveraging partners that allow you to focus your time, energy and capital on aspects of your value proposition that are truly differentiated.

 

Ken Hullings is executive vice president-client success at LPL Financial. Contact him at [email protected].

 

 

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