The emergence of the hybrid advisor

How embracing technology can help you build stronger client relationships

The adoption of technology within the wealth management industry is often seen as having two opposing approaches: there’s the fully automated robo-advisor at one end of the spectrum, and the traditional wealth manager who offers limited digital capabilities at the other end.

There is a dichotomous view held by many that the traditional wealth manager risks being disrupted by technology, while the robo-advisor will serve only a limited segment of the investor community. But this polarized view is beginning to change as tech-savvy advisors are combining new technologies with the unique power of human advice to present an offering that sits right in the middle of the spectrum between robo- and traditional advice – the hybrid advisor.

EY’s 2019 Global Wealth Management Report shared findings from interviews with more than 2,000 wealth management clients in 26 countries. One of the report’s most interesting stats was that 42% of surveyed clients wanted to receive financial advice in face-to-face interactions with their advisors.

While these clients might prefer to interact digitally for transactional activities such as receiving compliance information, trade confirmations and know-your-client (KYC) forms, they want to speak to a human advisor when it comes to receiving financial advice. This desire for human interaction increases with high net-worth clients, who have more complex financial needs that require judgment and emotional guidance.

The hybrid advice model is desirable not only for these clients, but for the advisor. It offers economies of scale that enable faster business growth. By automating many of the mundane transactional activities within your client relationships, you will be positioned to manage more clients while freeing yourself to spend more time providing the human financial advice they seek. Adding digital capabilities to your practice may also make you more attractive to younger clients, who may not have significant assets now but have tremendous earning potential and might receive substantial intergenerational wealth transfers.

As you develop your hybrid advice strategy, it is important to look at each client touchpoint and think about whether it is more effectively delivered digitally. Common examples include high-friction touchpoints such as client onboarding, KYC, compliance and client reporting. These processes tend to be the low-hanging fruit for leveraging technology to make your client relationships more efficient. Digitizing these activities is becoming table stakes for today’s advisors and dealers.

Moving upstream on the value curve, advisors are leveraging technology to support activities such as financial and retirement planning, and portfolio management.For advisors and dealers who have already implemented a hybrid advice model, the results are compelling. In a report titled The New Face of Wealth Management in the Era of Hybrid Advice, Accenture noted that “hybrid model clients are among the most likely investors to have discussed family needs with their advisor, including long-term financial needs of parents (58%), children’s financial needs (67%), inheritance (57%), and estate/tax planning (42%).”

Augmenting your human advice with digital expertise will help you grow your business and make it more efficient. Like many other industries, wealth management faces disruptive forces. But by proactively embracing technology to transition your practice to a hybrid model, you will have more time for human advice, which will lead to broader and deeper client relationships.

By: David Reeve September 13, 2019 16:24
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