I recently asked ChatGPT what it thought of Mark Twain’s famous quote: Reports of my death have been greatly exaggerated.
The AI didn't understand my humor—which admittedly was not that funny.
While the power of artificial intelligence and automation technology within the wealth management industry will change how we operate, the foundational aspects of this business have not. Giving control of your money to someone—or in this case something—requires trust. Trust that is built upon several pillars—chief among them, a meaningful and honest relationship.
Real individual relationships, based on human interaction, cannot be replaced today by technology. And I do not believe they ever will be fully transferable. The relationship and personal interaction with advisors are where many individual clients find value.
This is also true of advisors looking for a firm to facilitate the next phase of their growth. The seemingly endless consolidation of the wealth management space fueled by private equity’s hunger for returns pushes firms to value efficiency over all else. And while that is extremely useful in the completion of forms and regulatory filings, this approach to relationships—with clients and advisors—hurts the long-term prospects of the advisor-client relationship and the firm itself.
Keeping The Relationship At The Core Of The Client-Advisor Relationship
Clients need to know their advisors care about them and their goals, and advisors should know that their partner firm cares about their goals, too. While there are several tools and solutions that advisors can use to help them develop proposals, manage portfolios and assets and automate paperwork, this trust must be built through regular communication.
Finding the right mix of tools that help build this relationship is useful but advisors who allow those tools to replace inter-personal communications are going to lose wallet share and growth opportunities.
Advisors around the country considering a move from one of the larger independents or wirehouses constantly mention to me about being forced to spend less time with more clients—emoving all personal communications in favor of efficiency only exasperates this problem.
Firms must not lose sight of their role in facilitating growth and supporting advisors.
The push from above to drive a particular brand of growth may seem efficient in the short term, but this kind of tunnel vision may have a long-term negative impact on an advisor’s ability to drive growth for their business and in turn their firm.
Technology has the potential to add hours to an advisor’s day and firms should encourage them to scale their business—but only so far. Removing laborious tasks from normal operations should be replaced with client management.
Firms focused only on short-term data often miss the opportunity costs of senseless growth. Part of the universal complaint from advisors is that while they want to grow their business, they know they do not want to ignore their current clients. For these advisors, the relationship with their client is too valuable to relegate engagement to an automated bot, and that is good business.
For those at recently consolidated firms, this pressure is much worse—and while technology can help address some of the concerns of a larger book of business, many of these advisors want the support to do what they feel is right for their clients.
Balance Is Achievable, But Not Without Humanity
In an ironic twist, a perfect example of this balance comes from our experience rolling out our technology support infrastructure. We have long supported our advisors in this channel and last year added even more resources through a new platform for advisors to learn about services and solutions available to drive business efficiency and growth.
However, some needed more personal support. And we choose to invest in our advisors by expanding our team. These technical support staff help develop meaningful tech stacks for our clients, so they can better serve their clients.
We did this because we listened and established real relationships with our network of advisors. They trust us to provide them with what they need to do their jobs and to acknowledge when we can do more to help.
Will larger firms listen? Will they be able to expand their view beyond a singular vision of efficiency? History suggests they cannot. And ChatGPT does not have a good answer for these questions either.
Mark Contey is Chief Marketing Officer at LaSalle St.