Technology’s disruption on major, long-standing industries in recent years has been profound. From Uber Technologies Inc.’s impact on the taxi business to Netflix Inc.’s similar effect on the video and cable industry to AirBnB in the hospitality industry, there are no shortage of examples of this significant paradigm shift. So, what lessons can be learned from these examples to prevent robo-advisors from disrupting your financial advisory business?
The common themes in these cases of disruption are that technology removes friction, adds convenience and changes the value proposition. Interestingly, the underlying product or service hasn’t changed; cars are still used for to get us from Point A to Point B; screens are used to consume entertainment; and beds are where we sleep. Technology hasn’t changed the product or service; technology simply makes the product or service easier to access. So, how does this all relate to financial advisory services?
First off, it’s important to understand the opportunities for building digital relationships with your clients. What are the most obvious points of friction in a relationship and how can technology be used to overcome these friction points? Client onboarding and the transfer of assets can be a frustrating and painful experience for clients as this involves tons of paperwork, many delays and confusion. Automating the client onboarding process and leveraging technology to add transparency to asset transfers will remove much of this pain. Technology is readily available to help financial advisors streamline this important and early client process.
Once the client is brought onboard, there are myriad compliance processes that can be automated and digitized to remove even more friction. In this regard, regulators did the investment industry a favour with the introduction of point-of-sale disclosure for mutual funds. The requirement for pre-trade compliance delivery necessitates a digital solution, which is a fantastic opportunity to build out your digital client relationships further. This coming December, regulation comes into effect for the post-sale delivery of ETF documents. Why not deliver the document digitally at the point of sale? This will create a better client experience and exceed the regulatory requirement. This is another opportunity to digitize your relationships with clients and improve client engagement.
Furthermore, leveraging technology to match product recommendations with investor profiles and building portfolios that match client objectives is not the exclusive domain of the robo-advisor channel. Digital tools that support know-your-product requirements and compare thousands of investment products now are available for the advisors. Integrating these applications into your practice will improve your value proposition by increasing speed and improving the quality of investment choices.
Client reporting is another opportunity for disruption. Leading robo-advisors go one step beyond providing online statements, confirms and tax slips. In addition to offering these static documents, robo-advisors also allow the client to use transactional data to assess performance over time and to plan portfolio growth. The data used to create these engaging digital experiences are the same data that are presented on printed statements. The key is to unlock the data from these documents so that your clients can engage with the data in a meaningful way. This leads to higher client engagement and increased convenience. This interactive reporting capability is available to traditional dealers on a variety of reporting platforms.
Technology will never replace the quality of human interactions. But if we can leverage technology to remove the friction associated with onboarding, compliance activities and client reporting, we will future-proof our practices from the robo-advisors of this world.