Glossy advertisements typically portray financial advisors as having financial heart-to-hearts with clients, listening as they talk money, college tuition or asset allocations. The scene is a pleasantly familiar moment that could be playing out in offices or across the kitchen tables around the country.
The message is clear: The front-end, client-facing aspects of financial advice—everything from how the advisor presents themselves to the client to the sophistication of the tech platforms clients use to communicate with advisors and interface with their accounts—is the heart of the advisor-client relationship.
Optics don’t tell the whole story, however. At the most elemental level, clients’ front-end experience may be what gets them in the door and can set expectations for what’s to come with their advisor. Yet it’s the back office that must deliver on those promises, and the behind-the-scenes performance of a firm’s tech stack—the speed and responsiveness of its tools, its ability to carry out functions without glitches, its level of automation—is crucial for building the trust that is essential in all relationships.
For years, wealth management firms have invested in the front end—essentially, their ability to make promises. But there’s a day coming soon when back-office operational capabilities, no matter how unglamorous they may be at times, will be the true differentiator, and the firms that can deliver on promises quickly and flawlessly will win out.
Expectations Matter
Realizing why back-end technology is so crucial requires us to get in the minds and hearts of investors. Investors also need to feel assured that their money is being handled safely, and any evidence to the contrary will invite fear and skepticism—not just about a specific advisor or a firm but about the entire financial advice marketplace.
No one, not even the most financially literate, shows up in life ready to talk about money, and for many investors just the very thought of money and life savings can evoke powerful emotions. It can take courage for individuals and families to make that first phone call to a stranger and bare their financial souls.
What happens after the initial planning is done can cement first impressions about the entire financial planning process for years to come. Even temporary delays in account setup or a slowdown in the transfer of assets across accounts can raise a red flag for clients.
Adding to the weight of the current moment and the importance of delivering on expectations, we’re in the midst of the largest intergenerational transfer of wealth in history—$68 trillion to be passed down from boomers to their Gen-X, millennial and Gen-Z children.
Those generations have been raised on excellent technology and have the same high expectations for every piece of hardware, portal or app that crosses their paths. Advisors and firms who can deliver solutions that offer simplicity, transparency and security to younger clients are at a distinct advantage vis-à-vis their peers.
Firms Need To Pay Special Attention
Wealth management firms know that increased streamlining of business processes and greater automation of mechanical tasks can be a great boon to efficiency, both in their own operations and those of their advisors. No one needs convincing that the smart deployment of tech can yield real returns.
But firms are mistaken if they still think that only the client-facing portions of their technology matter.