For financial advisors, the promise of technology has always been to help advisors better leverage their time to grow their business. One possible way to do this is to use the time savings of technology to serve a higher number of clients. However, another approach advisors can take is to use their technology to do more – and better – work for the same number of clients while earning higher fees for the higher-value services they provide.
In the last 10 years, coinciding with the rise of robo-advisor technology that makes it possible to streamline and automate much of the process of investment management, advisors have leveraged the decreasing amount of time it takes to manage client portfolios by providing more and deeper planning for their clients – highlighted by the fact that, while the number of clients served by each professional at an advisory firm has actually decreased over that time, revenue earned per client has actually increased by 72%, either due to advisors increasing their fee schedules or using the same AUM fee schedule but working with more affluent clients with larger account balances (and therefore pay higher fees).
In more recent years, however, entrepreneurial software providers have picked up on advisors’ demand for tools that help them broaden and deepen their planning beyond even what traditional comprehensive planning software can do. And so there has been an explosion of new tools in the AdvisorTech landscape that are not about saving time on advisors’ existing processes, but instead are geared towards adding new functions that advisors don’t already do, such as providing more in-depth and specialized planning capabilities, and engaging clients more proactively throughout the year rather than centering around 1 or 2 review meetings.
As a result, there is now a plethora of tools to choose from for advisors who want to enhance the value they provide to their clients – so much so, in fact, that there are now more of these solutions than one advisor could possibly use. Which means the challenge for advisors is not necessarily in finding new ways to improve their planning services, but in deciding which approach will deliver the most value (and which of the ever-growing number of tools available will best support it) for the cost in time and dollars that it requires.
The key point is that by digging deep into how they want to provide value for their clients, advisors can choose how to get the most out of their technology. This is particularly important at a time when most advisors are bombarded with pitches for new tools that often promise the world in terms of the features they deliver. By viewing the decision through the lens of the client’s needs and wants, advisors can have an easier time deciding which tools can best enhance their work – because ultimately, each new solution on the market is just a tool to support the advisor’s ‘real’ work of creating a great planning experience for their clients.
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