Technology like smartphones, tablet PCs such as the iPad and similar Internet-enabled devices have become ubiquitous in everyday life. They're also fundamentally changing investors' attitudes about how to best manage their financial lives -- and who they should seek out for guidance and advice in the process.
These changing attitudes have major implications for financial advisors. To stay competitive and attract the next generation of affluent investors, RIAs will need to increasingly rely on the latest technology to meet their clients' expectations as they evolve.
The good news: RIAs can use the same technologies that are driving behavioral changes to deliver an enhanced level of service -- a highly personalized Know Me experience. What's more, those technologies are easier than ever for RIAs to access and integrate into their practices.
Tech And The Changing Investor
The use of Web-enabled devices like the iPad and iPhone has exploded in recent years. One in three adults in the U.S. now owns a tableti -- most likely the iPad, which controls 98 percent of the tablet market.ii Meanwhile, smartphone sales have surpassed PC shipments.iii
These devices and what they offer are reshaping consumers' attitudes, expectations and behaviors when it comes to their relationships with a wide variety of service providers-including financial advisors.
Consider, for example, the unprecedented degree of personalization that occurs today when interacting with online retailers that use customers' viewing and buying histories to offer suggestions of other products and services of interest or the local pizza shop that instantly pulls up a customer's phone number, credit card info and previous orders when he calls for a delivery.
Consumers' daily lives increasingly consist of a series of interactions that are customized specifically for them in real time by providers who "know" them on some level. This type of personalization is becoming expected-even demanded.
Such demand is having a direct impact on how investors manage their financial lives and on the advisor-client relationship itself, as more investors tap into technology to gather financial information, analyze it and ultimately make decisions about their wealth.
Take social media channels, such as Facebook and LinkedIn. A Forrester Research study of investors who were online, had more than $500,000 in assets and worked with a financial advisor found that a full 93 percent of these investors have a social networking accountiv. These are your clients. They're using social media. And you can bet that for many of them, it's influencing how they learn about financial and investment-related topics, research investment ideas and make buying decisions (with or without your help.) In creating yet another avenue for investors to access knowledge and advice with one click, social media is changing the conversation between advisors and clients and how they interact.
What's more, this personalized information experience has become increasingly portable and on-demand. Investors now count on having access to information anywhere at any time-and on whatever device they want. This makes sense given the huge growth of handheld and mobile technologies noted above. However, the extent to which investors have come to rely on these devices is striking. Forrester reports that 25 percent of U.S. online adults have an interest in using their mobile device as the main channel for their personal financial livesv. These devices, which let users conduct financial transactions from the comfort of their living rooms, are empowering investors and giving them more flexibility than ever. The financial advisor sitting in his or her physical office is no longer the client's only link to the financial world-and may not even be the primary one.
Delivering A Know Me Service Experience
In the face of such developments, RIAs must ask themselves what it will take going forward to deliver a true "Know Me" experience that gives their clients the information and resources they want, when and how they want them delivered. As clients look to advisors to bring a highly personalized, highly flexible and "real time" experience to their financial lives, advisors will need to respond. For most, the response will require using technology to respond faster and more proactively, and to communicate with their clients through a variety of channels.
Some advisors argue that these new expectations and behaviors around evolving technologies don't apply to their existing clients. While that may be true in some cases-an 85-year-old retiree may not be looking to research stocks on an iPhone, for example-it would be foolish to assume that older investors aren't interested in technology-enhanced service. (Just think about how many people's parents are regular Facebook users. Or how many now purchase goods and services online.)
What's more, the need to deliver a technology-enhanced Know Me experience goes well beyond advisors' current client base to younger generations, for whom all this web-enabled technology is the norm. Younger affluent investors and entrepreneurs as well as the children and grandchildren of today's clients will expect any advisor they work with to use technology to provide customized, on-demand service and rapid response communications. These prospective clients will be hugely important to the future of RIAs' businesses.
So what will it take? Bringing true "anytime, anywhere, any device" service to clients will require advisors to take advantage of the same technologies and trends that are driving the changes in investors' behaviors in the first place. In particular, three technologies will be key drivers of the new Know Me experience:
1. CRM. A robust client relationship management system in which all key client information resides serves as the command center of a Know Me service experience. A CRM should include all the basic information (personal data such as a client's birthday, the names of their children and so on) as well as more detailed characteristics that help advisors customize their interactions with clients. For example, one advisor we work with uses CRM to categorize clients by the source of their wealth (inherited, entrepreneur, etc.) and other psychographic information. Each type of client tends to react differently during periods of market volatility. By having such information readily available, the advisor can proactively reach out to various clients when necessary in a highly personalized way.