The Advisor’s Changing Relationship with Technology

Financial advisors and technology

photo: veer

From desktop PCs to smartphones and beyond, technology has shaped – and will continue to shape—the way people stay connected and the way businesses interact with their customers.

The financial service industry is no stranger to this phenomenon. As many advisors could attest, their relationship with technology in the past 20 years has evolved, largely in response to their clients’ needs and expectations. Many advisors now seek to stay ahead of the trends.

What kind of relationship will advisors have with technology years from now? One can only speculate. But perhaps by looking into the past we can begin to imagine where the industry might end up in the future.

The Way It Was.

The financial service industry got its first real taste of tech efficiency when Microsoft rolled out their suite of Office products. By the mid-‘90s, Outlook, Powerpoint, and Excel dominated the industry.

Advisors would manually enter data into spreadsheets, carefully build plans, and present the finished product, all while managing client interactions through email. It was a process that would often take weeks – if not months – to complete. With filing cabinets filled with their client’s paper statements and receipts, advisors had the infrastructure in place to grow their business effectively.

With the exception of a few platforms designed for wealth planning, this system allowed the financial industry to thrive during the years that followed. Clients were satisfied with the sometimes demanding process of developing and updating plans—as long as advisors made good on their promise of investment returns. Of course, that all changed during the financial crisis of 2008. Investor confidence in the financial industry plummeted, and advisors needed to shift their focus to long-term planning
and a better client experience.

The Way It Is.

Fast forward a few years to the present.

Financial advisors have an arsenal of tech tools at their disposal. Financial planning software allows advisors to update and adjust plans with a click of a button and quickly test scenarios. Account-aggregation and document-storage technology digitizes their filing cabinet and cuts down manual data entry dramatically. Customer-relations management software helps advisors identify new growth opportunities.

This technology allows advisors not only to scale their practice, giving them more time to win new business, but also to enhance their clients’ experience. Mobile technology and the cloud make financial data portable and easily accessible, offering clients the convenience of interacting with their financial picture wherever they are.

But even with years of tech advancements, some advisors still revert to their old system of spreadsheets and manual data entry. While this technology still works for these advisors, it offers neither the convenience nor the on-demand service of upgraded technology, two of the biggest qualities touted by
the human advisor’s latest threat: Robo Advisors.

The Way It Could Be.

Many in the financial industry fear that the emergence of Robo Advisors means the end of real financial planning. People won’t need human advisors. They will be able to manage their entire financial picture themselves. This is pure science fiction.

True financial advisors know there will always be a need for real, comprehensive advice from a professional who has the knowledge, experience, and judgment to provide timely and resourceful advice about an array of complex financial issues, someone who knows his clients as well as he knows the economic landscape. Such advisors are invaluable because they evaluate and embrace new technology not with giddy enthusiasm, but with humane wisdom.

As time marches forward, technology will continue to evolve, allowing businesses to continue to scale their workflow, automate their tasks, and win new business. Of course, advisors will need to keep alert to a changing world and be ready to adopt, where appropriate, the next technological advancement. But they must never forget that their essential role is to provide sensitive, perceptive, personal counsel based on rich familiarity with the clients’ needs for the present and goals for the future.

For the latest industry trends and leading practices, check out eMoney Advisor’s range of helpful resources for professional financial advisors here.

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