In a world in which Amazon and Netflix are eating their competitors’ lunches because they personalize services, the advisory industry must learn to anticipate the needs of clients, a new report says.
“Modern consumers have come to expect personalized experiences tailored to their needs, preferences and financial objectives,” according to a report by the Money Management Institute (MMI) entitled, “Modern Wealth: The Roadmap to Improved Investor and Advisor Outcomes.”
The industry is in danger of losing clients who are often confused by multiple advisors and the lack of personal relationships and comprehensive solutions, the report stated. It cited recent research from Epsilon that found 80% of consumers are more likely to do business with a company that offers personalized service. Also, 90% indicated that they find personalization appealing.
The wealth advisory business is “already playing catch-up” with many clients because they don’t have personal relationships with advisors, the report added.
Citing Amazon and Netflix, the report said that companies that fully invested in online personalization features outsold those that have not by more than 30%.
“The core of the matter is the typical client nearing retirement has five or six accounts and two or three advisors," MMI co-chairman Jack Sharry said in a prepared statement. "They bought these products at different times, at different places and for different reasons, but there is no level of coordination."
Part of the problem is that the industry has historically been focused on selling products, he said, adding that a new approach is needed.
“They need to connect the dots on all the operational, product and other elements," Sharry said. "You need to be able to look across an entire household."
Advisors should offer services including a unified managed account (UMA) approach to replace today’s "loosely linked advice tools and single product solutions,” the report said.
New approaches should be less numbers oriented and more designed to achieve goals, said the report, which noted that from the second quarter of 2017 to the second quarter of 2018, UMA assets increased 23.6%, from $645.7 billion to $798.1 billion.