The Bridge to a Hybrid Advisor

Despite the early threat of robo-advice disrupting the wealth industry, experts now align on the notion that technology will not displace the wealth advisor. The emergence of a hybrid model combining leading-edge digital capabilities with human empathy, expertise and advice is now considered to be the winning model for wealth leadership. The ideal end state is one where the client receives the best of both worlds — a superior customer experience, expanded choice and transparency, combined with human judgment and reason. When done right, the combination of technology and advice becomes a powerful lever for making better financial decisions.

But as the industry shifts toward this model, many advisors feel that current technology investments are not delivering on the promise. In a recent Advisor360° survey of U.S. advisors and executives at large broker-dealers, 65% of advisors said they’ve lost business from clients or prospects due to outdated wealth management technology. More than half of the advisors who reported business losses due to technology shortcomings said this has happened with prospects, with the remainder reporting business loss from existing clients. Just over half (58%) of the advisors and executives surveyed classified their technology as “modern.”

A successful hybrid advice model requires technology that delivers on four primary goals: advisor productivity, compliance simplicity, investor engagement and seamless integration. The Advisor360° survey revealed that advisors’ biggest challenge is lack of automation and functionality of internal systems, including client onboarding and client reporting preparation. Two-thirds (67%) of advisors spent two hours or more generating reporting for client meetings, and 25% of those advisors considered client onboarding processes a significant constraint. Modern technology that automates these functions will free advisors to spend more time with their clients.

Despite the sharp increase in wealth regulations, compliance automation has lagged, with many firms and advisors relying on manual processes to remain compliant. Recent best interest regulations, including client-focused reforms in Canada and Regulation Best Interest in the U.S., place more analytic demands on advisors. The know-your-product requirements of these regs expect advisors to analyze up to one million data points daily to remain compliant — an impossible human task. Wealth firms must be equipped with powerful compliance technology to balance regulatory compliance and advisor productivity.

Client-facing tech demands are also increasing, driven by pandemic-induced virtual interactions and shifting demographics fuelled by the largest intergenerational wealth transfer in history. As firms address technology gaps within internal processes, they also must modernize client onboarding, financial planning and reporting technology. The wealthtech landscape supporting these automation priorities is fragmented, and technologies must have open architectures for data and systems integration.

A future where integrated technologies drive high advisor efficiency, compliant recommendations and engaged clients is achievable. Wealth leaders that invest to build the hybrid advisor model that drives better financial decisions will emerge as winners in an increasingly competitive industry.

By: David Reeve, CEO of InvestorCOM, Published November 28, 2022
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