Advisors will have to combine technology with the human touch if they want to succeed next year, says Folio Institutional, an investment solutions and financial technology firm in McLean, Va.

The firm issued its “Top Advisor Industry Trends” report Monday.

According to the firm, wealth management is a growing industry but the scene is changing, presenting new challenges for advisors. Technology and new regulations are going to top those challenges, Folio says.

“Those advisors who are able to blend personal service with technology and adapt to the changing rules of engagement will create more enduring relationships and ultimately deliver better value to their clients,” says Greg Vigrass, the firm’s president. “Opportunities for growth exist for wealth managers who promote their intellectual capital; demonstrate awareness of clients’ fears, knowledge and personal preferences; and integrate technology into their business.”

In the coming year, advisors who complement their technology services with professional judgment, offer client education and use behavioral finance techniques will better articulate their unique value to their clients, Folio says. They will also need to train staff to spot cybersecurity issues.

“It’s no longer a matter of if but when an advisor will be victim of a cyber-attack, such as phishing, network spoofing or some other threat, says Folio. “Advisors need to be prepared to safeguard the personally identifiable information handled by their firms. They’ll also need to train staff to protect the firm from risk and establish protocols to ensure that third-party vendors use the most rigorous security measures.”

Compliance and regulation are likely to become more, not less, complex, Folio predicts. Because of the debate about fiduciary standards going on in Washington, advisors will be expected to address clients’ questions about their fiduciary responsibilities to clients and the fees and expenses they are incurring.

On the investing side, more diversification in portfolios is anticipated as advisors search for more non-correlated assets, including real estate and annuities. At the same time, advisors will have to address sustainable investing or risk weakening their relationship with clients.

“As with many other industries, the availability of technology is beginning to outpace advisors’ ability to stay abreast of what is most useful to delivering client value,” Vigrass adds. “While technology can be a driver for growth, striking the right balance between pursuing it and delivering quality advice can be challenging, especially for small and midsize firms. In addition, with the rise of investor engagement, successful advisors will leverage the fact that there is still ample room for the human touch in the client relationship. ”