First published in Financial Planning
This is not a test. In the midst of unprecedented upheaval caused by the coronavirus pandemic, the time to noodle around “getting innovation right” or having a “functioning technology strategy” is over.
Yet for those who spent the time, hired the right people, shifted their spending and put up with the pain of change, this is the time to shine. Your clients can now connect via video chat, remotely sign documents and easily get answers to their mounting questions.
But don’t expect many thanks: for years now they’ve come to expect it of your firm because you were smart enough to think ahead, invest the money and deliver on those expectations.
For those who didn’t make the shift, this is going to be a painful wake-up call. You should be prepared to address additional frustration that your clients are going through.
Anyone who’s used DocuSign — or any e-signature solution — knows that it’s possible to both dazzle and simplify a client with surprising ease. However, many wealth firms have still not adopted it. Why? We’ve seen many reasons, including info security, compliance concerns, document storage questions, custodial limitations, general resistance to change or tech investment.
But in a time of social distancing when your prospects won’t or can’t come to you for a physical signature, this may be a deal breaker and an unnecessary frustration point for long-standing clients.
Digital client portals
Where do your clients go when they want information, to raise a concern or review the impact of the market on their financial plan? Do you really expect them to call you, set up a meeting and come into the office to talk? Even before COVID-19 broke out, your clients expected more. With many great solutions on the market to provide a secure, elegant and educational client portals, it’s inexcusable that many firms still lack this.
This is an especially critical time for your older and (at least perceived to be) lower-tech-adopting clients who should be avoiding non-essential contact. There have been numerous research studies, articles and news reports that show this demographic is increasingly adopting digital technology.
A research report by Scorpio Partnership for the CFA Institute in 2017 showed that advisors across the board significantly underappreciated their client’s expectation for better digital tools. The report also showed that nearly 40% of all wealth clients over the age of 55 considered the strength and breadth of a digital client offering was one of the core values of their wealth management experience.
Better performance reporting
We’ve seen many clients forego upgrading their performance reporting ability over the last decade. There are some amazing solutions on the market today that provide tremendous flexibility in reporting periods, aggregated external assets, integrated financial planning data and even SRI/ESG exposures.
Any advisor still using legacy tools to update concerned clients will be in trouble and will likely be spending far more time compiling the answers than proactively reaching out to their clients with data and insights.
Wealth transition planning
The recent crisis illustrates how important wealth-transition strategies are for clients. According to recent data, patients over 70 have a significantly higher rate of mortality than younger individuals.
For those advisors who have not spent time working on wealth transition strategies with their clients and dependents, this could be a disruptive and chaotic time as families and dependents of these clients may not have the right plans and directives in place.
For firms that have been through their innovation process, this will be a great time to showcase their abilities to prospective clients that will be frustrated with their tech-lagging provider.
Sadly, if you didn’t upgrade your tech over the last 10 years, the next few months will be challenging.
The technology hole we see in many firms, both large and small, creates a “haves vs. have-nots” scenario — one that puts tremendous pressure on laggards. While we expect those firms lacking the right tools to struggle, we also would expect that some may be able to make quick moves in the near-term to reverse the trend.
One of the brighter sides to this scenario is that there are far better tools, vendors and insights available today for firms that are starting to wake up.