No matter their views on masks, shutdowns and social distancing, financial advisors will likely emerge from this year’s coronavirus outbreak into a changed environment.
Two advisor-facing fintech firms are urging advisors to get ahead of those changes by pushing both technological and behavioral innovations within their businesses.
Oaks, Pa.-based SEI has tried to lead by example, said John Anderson, managing director of practice management solutions, by embracing digital engagement with both its current advisors and those it is trying to recruit. Advisors, by and large, have followed suit.
“Early on during the quarantines, the natural inclination among advisors was to circle the wagons and protect what they’ve got,” said Anderson. “They were reaching out to clients and peers, and from that outreach we heard phenomenal stories of random acts of kindness and people empathizing with their clients.”
Anderson said he's starting to see advisors come to the realization that many of the changes they made to address the impacts of the pandemic will be very long lasting, if not permanent.
That requires a different and, perhaps, a higher level of empathy than what was called for at the beginning of the outbreak, he noted.
“We have to pay attention a bit more to the environment around us, we have to put ourselves in the shoes of the client or prospects across the Zoom call from us, and understand that things done virtually need to be shorter and more engaging,” Anderson said. “Because we have more time on our hands with no commutes, we have the ability to set shorter, more meaningful meetings instead of long meetings dumping data on our clients."
SEI has embraced the shorter meeting concept through its advisor education and recruitment efforts. Whereas previously the firm would hold day-long or half-day meetings and workshops and recruiting events in event spaces within geographic financial centers, today it is running “advisor discovery day” for prospective advisors online. The meetings run for 60 to 90 minutes, according to Anderson.
Anderson also said that SEI has curated and broken its content into more digestible pieces so they’re easier to engage online, which allows the advisor to “pick and choose what their experience is.”
Whereas advisors would once be treated to a meal in an SEI office or event space, the company is now offering prospective advisors an opportunity for a complimentary UberEats delivery, or instead direct that money to a charitable endeavor. Since starting the UberEats offer, SEI has diverted $200,000 to local food banks.
“We’re finding that happening on the client level as well,” Anderson said. “We no longer have to get in the car, drive to our office, find a place to park and sit there for an hour in an office, so we’re all having shorter and more meaningful—and more impactful—conversations via Zoom and WebEx.”
SEI is also offering advisors “webinar Wednesdays” that contain a deep dive into practice and planning oriented topics.
In the future, Anderson believes that advisors are going to have to be more specialized to survive, as the larger part of the industry will either be fully automated, or a small set of extremely large firms able to operate at a level of scale and efficiency unreachable by most advisory practices. The pandemic has only served to accelerate that shift.
“Most advisors are not only unprepared for the ongoing demographic shift, but they’re not prepared for the accelerating shift from advisor-focus to consumer-focus,” said Anderson.
Along similar lines, Chicago-based Envestnet created “The Advisor's Playbook for Leading Your Clients Forward” for advisors to help them navigate a post-Covid world where social distancing and technology have transformed ways of doing business.
“Covid-19 has changed the way we live and increased the speed of changes that were already occurring,” said John Harris, managing director at Envestnet. “Some things have become less relevant, but we’re not abandoning the path the industry was on prior to the pandemic. Some things are just speeding up to a degree.”
The playbook outlined six changes that have occurred or been accelerated during the pandemic:
- A new level of trust and relevance is expected for clients.
- The outbreak changed what it means to be prepared as an individual and as a business.
- Digital communications have to become “more human.”
- Health and wealth have become inextricably fused.
- Families and communities are leading the way in redefining lives.
- There is now an increased emphasis on sustainability.
To build trust and relevance, Envestnet recommends that advisors lead with empathy, but also take efforts to make sure clients’ sensitive information is protected from cybercriminals and others.
“It’s an opportunity for advisors to recognize that there are strange and unique things happening within their clients’ lives right now due to the virus, and it’s causing them concern,” said Harris. “Not only should you help advisors voice those concerns, you should help them recognize that it’s not unusual: we’re all feeling this way.”
Envestnet also recommends that advisors segment their clients and deliver more personalized experiences to demonstrate that they understand each client and family’s unique needs.
To help clients be more prepared, advisors should simplify the planning process and personalize it to specific goals and concerns. To act on these goals and concerns, advisors should gamify the planning process.
Clients are being bombarded like never before with information—and a lot of it is noise—coming from analysts, columnists, social media posts and bloggers.
“We believe it’s an advisor’s responsibility to help navigate a lot of that information, it confuses clients and often prompts the wrong kinds of actions in the portfolio,” said Harris. “Guide them to relevant information. There’s so much bad information it’s overwhelming.”
Advisors also need to regularly review clients’ views on risk and adjust their plans, putting their concerns in perspective with advance planning and risk tools.
Social distancing and work-from-home set ups have forced advisors to use digital communications tools, but most advisors have yet to humanize their communications with clients, according to Envestnet. To be more effective digital communicators, Envestnet argues that advisors need to take advantage of both automation and personalization.
“Provide some guidance and counsel to clients and their children,” said Harris. “Provide them with education and information on business continuity, retirement planning, the Paycheck Protection Program, other government sponsored programs. Or try something more interesting or fun, like cooking classes, book reviews or wine tastings, all of which can be translated into virtual environments.”
Advisors have an opportunity to curate more content and offer their clients and prospects virtual learning opportunities to enhance their financial literacy. Digital communications offer advisors more potential touchpoints with which to deepen client relationshis, like virtual meetings, email gift cards and virtual seminars.
Envestnet also calls for more co-planning services, allowing clients to access their financial data in real time via a client portal.
“Put some control in the clients’ hands,” said Harris. “Start offering them small, short segments of the planning process to encounter in a self-directed manner. These small, bite-sized pieces can be fed out to clients as they need it. It allows them to begin to participate in the process.”
Harris said Envestnet | Moneyguide’s MyBlocks and client portal are a significant step towards more co-planning in weathtech and fintech.
Envestnet also argues that advisors need to recognize that health care and wealth management are fusing. Advisors should harness this trend by offering more planning solutions for various health outcomes and scenarios, and by emphasizing elder care and estate planning.
Families and communities are leading all of these changes, according to Envestnet’s playbook. Advisors need to recognize that family is typically a client’s No. 1 priority, and make time in every conversation for personal updates and specifically asking about the well-being of family members.
Children, grandchildren and elders should be included in the planning process where feasible so the focus is on the entire family and its needs. Client liquidity and insurance needs should also be incorporated into planning.
Envestnet argues that the business of the future is unlikely to resemble the pre-Covid 19 business model. Office roles are being rethought, and advisors will look to use digital tools and outsourcing to create more efficiencies and scale within their practices. In an era where more stakeholders will be connecting from remote and potentially geographically disparate locations, team-wide access to cloud-based tools will be essential.
“For the most part, I think the industry has handled Covid-19 very well,” said Harris. “Advisors have navigated the issues with their clients towards positive outcomes, and things have started to pull back towards much more normal levels in the past few weeks. But the pandemic has created the incentive for a lot of change, and that change creates opportunities for advisors.”