Advisers Still Behind on Client Tech Demands

The research from Aite Group and Scivantage, a technology provider for financial services firms, is targeted at advisers working in wealth management, but the takeaways are also applicable for retirement specialist advisers, given the overlap of practice interests and significant technology investment in the qualified plan advisory space.

In “The Race to Easy: Reevaluating the Wealth Management Technology Strategy,” researchers suggest the passage of more and more wealth to Generation X and Millennial investors requires firms to launch new service models that blend high-tech and classic adviser services.

“Evaluating how digital technologies complement and enable existing adviser services should be a priority for firms to ensure they remain competitive over the long-term while they continue to meet the needs of existing clients who now expect self-service tools and digital access to their wealth information,” notes Sophie Schmitt, senior analyst, wealth management at Aite Group.

According to the report, the majority of today’s financial advisers are still under-prepared to deliver the digital experiences that investors need and expect. Further complicating matters, the adoption of mobile and tablet devices for accessing and managing personal finances is increasing steadily across all generations, not just Millennials. As a result, advisers need to prioritize information technology advancements that contribute to the success of all client segments.

The report maintains advisory firm owners have another reason to implement technology improvements beyond ensuring client satisfaction, cited as a key technology innovation driver by 72% of advisory executives: Improving technology will also be critical for attracting and retaining younger advisers to the firm. This is especially important for firms leaning heavily on longtime advisers forming the backbone of a practice’s book of business, who may be approaching their own retirements.

These points are further supported by data showing just 55% of advisers have their own websites. Within a few years, this number is expected to reach 80% as advisers recognize the importance of a digital platform for attracting younger talent and clients. Over 40% of advisers recognize “the importance of providing digital self-service tools to young clients that offer a combination of high-tech and high-touch service,” Aite Group finds.

While younger generations are more likely to tap into digital tools to build their financial knowledge base and access their investment portfolios, Baby Boomers look to traditional investment firms and financial advisers as their primary source of support. According to the report, nearly 60% of Boomers receive help from a traditional investment firm or financial adviser, compared with only 27% of Millennial investors.

“This disparity in advisory preferences highlights the crucial need for firms to prioritize investment in their financial advice platforms with an eye on Millennials,” adds Chris Psaltos, vice president for product management at Scivantage. “While the role of financial advisers is changing rapidly, they are far from being obsolete.”

Instead, firms must expand their offerings by introducing more digital touchpoints—such as “robo-advisory” and collaboration tools, which are taking on an increased role for today’s investors. Overall, client-facing technology is considered most valuable to investors when delivered alongside an adviser, the report concludes.

“As firms initiate projects in digital wealth management, they must first understand how new technology can be applied to better meet clients’ financial needs,” Psaltos says. “While technology adoption between younger and older generations varies, the underlying takeaway is that investors across generations have a need for financial planning, and the advisory firm of the future should be equipped to respond to this with a combination of high-touch and high-tech solutions.”

The full report can be downloaded here.