"Passionate," "trustworthy," "empathetic" and "knowledgeable" are just a few of the words clients might use to describe what they look for when hiring a financial advisor. But if the package does not come with “modern” technology, you are out of luck, according to a survey of advisors by Advisor360°, a provider of integrated technology for broker-dealers and other wealth managers.
Fifty-two percent of advisors said they have lost prospects because their firms’ technologies did not meet expectations and 25% said existing clients have walked away, according to the survey of 300 financial advisors and executives at large broker-dealers, registered investment advisors and bank trust companies across the U.S.
Further, 58% of advisors said their technology is modern but only 3% described it as integrated and innovative. Thirty-nine percent said their existing technology is outdated.
Respondents with upgraded technology indicated that they had more new client growth. Four in five advisors with modern technology reported more than a 6% increase in inflow of new client assets under management in the last financial year. That compares with more than a 1% increase for 52% of those lagging in technology, the survey noted.
“Technology can be a game changer for advisors who want to grow their business,” Richard N. Hart, senior vice president of corporate development at Advisor360°, said in a statement. “Firms that can’t innovate to today’s standards or don’t stack up to peers are leaving money on the table.”
When asked what they see as the most important aspect of a client’s connected digital wealth experience, 38% of advisors said the ability to see a complete, consolidated view of their financial lives across all products (banking, investment, and insurance) and 28% said having access to their accounts anytime, anywhere. Yet, 43% said their technology is primarily advisor facing, not client facing.
Seventy-six percent of advisors cited texting and direct messaging as transformational for their business, and half also indicated that digital onboarding of new clients could have a significant impact in the future. But 28% described their current onboarding process as a “constraint.”
And while onboarding new clients poses a challenge, most advisors said their technology platform is adequate for managing key clients. Sixty-seven percent said it enables them to focus on their most important clients, 63% said it delivers robust financial planning advice, 59% said it allows efficient marketing to their existing client base and 59% said it allows them to deepen relationships with clients.
But respondents said there is plenty of room for improvement. The biggest challenges, they said, are that their technology setup lacks automation (56%), functionality (44%), integrated tool/apps (43%) and that it also does not have enough end investor/ end client capabilities.
“Firms with the right technology improve their advisors’ ability to offer robust financial guidance and form deeper client connections, which ultimately translates into strong, healthy businesses,” said Hart.
The survey, which was conducted by telephone and email in September 2022, included firms with more than $5 billion in AUM and more than 1,000 employees on average. It was conducted by Coleman Parkes Research on behalf of Advisor360°.