How to structure your business for digital and hybrid advice

The pandemic has accelerated the shift towards a more digital world and triggered changes in online behaviours that are likely to have lasting effects.

During the initial phases of the pandemic, many wealth management firms rushed to purchase software tools that would help their teams better serve their clients in a remote setting. Through 2020/21, departmental leaders have spent a large amount of time adding or integrating channels.

This is great but these tools don't necessarily integrate with their existing technology stacks. Nor do they always correspond to the business's strategic objectives. The result has been that many firms find themselves with a costlier, more complex network of channels to manage, increasing the complexity of working practices, while the client experience remains unchanged.

As financial advisers re-examine their technology stacks, they'll need to develop a more strategic approach. Rather than adopting new technologies in a rush to adapt to external change, they need to consider the longer-term business landscape. They will need to reflect these changes into their workflows and processes across their technology platforms, data collection tools, guidance and advice integrations, and investment platforms.

A digital-first approach is emerging when it comes to addressing client needs. This will transform the advice process from its current reactive state to a more proactive stance, which is made possible by increasing access to volumes of valuable client data that advice firms have at their fingertips.

As we look to the future, providing an outstanding client experience should be a significant motivation behind digital transformation programmes.

Open data and the value of client data

Open data allows for client data to be exchanged between third party applications, by creating an interconnected ecosystem of applications, each sharing data. What's exciting about this is the ability to create new business opportunities and transform the client experience.

When it comes to client onboarding, for example, open data removes a huge amount of manual administration, such as know your customer (KYC). It can provide immediately and accurately fulfilled client records. This is not only more productive by delivering cost and time savings to financial advisers, but it also leads to lower levels of client abandonment by reducing friction and creating an improved user experience.

Account aggregation, whereby financial advice firms can easily obtain a live feed of a client across his or her entire financial life, means advisers can add enormous value by taking a proactive approach when a client's circumstances or goals change.

But unless firms can capture and analyse client information comprehensively and automatically, they'll never be able to trust the data unequivocally. Financial advice firms must ensure that their legacy systems are properly connected. Such data can then be accurately obtained and used in meaningful ways to better serve clients.

Give the people what they want

Automation can transform the adviser experience. So many firms have reported that their teams' motivation has been negatively affected because they're constantly dealing with an ever-increasing number of administrative processes such as KYC, fact-finding and manual client onboarding. This can reduce job satisfaction as well as productivity.

Consider what advice firms could do with the saved time if fact-finding wasn't so time-consuming. Wealth Wizards' client data reveals that nearly all clients who are sent digital fact-finding elements to pre-complete, prior to a planned meeting, do so in time.

From an operational point of view, it can save 30-45 minutes of client-facing time, which can then be better spent focused on understanding client needs and objectives. That's higher than you'd expect when going through the same process with a human, and financial advisers have begun to recognise this.

Integrating automation tools into the advice process allows advisers to focus more on their core activities. In doing so, they can bring down client acquisition costs, enabling them to reach new audiences.

Automation tools that are compliant can go a step further in taking out some of the heavy lifting when dealing with new client segments, by providing robust advice recommendations on a host of topics such as retirement planning, consolidation of assets, portfolio rebalancing and automated savings. For simpler items, this can be achieved without the need for adviser contact but clients always have that option if they need it.

For the digital adviser model to succeed in the long term and to attract new relationships in the future, advisers will need to provide a much richer experience rather than just ‘money management'. This way of working requires a hybrid digital and human model that will deliver a proactive, personalised and logical user experience, while supporting advisers by removing needless administrative tasks, thus allowing firms to focus on their core business - timely, sound financial advice.

‍If you'd like more information on digital and hybrid advice, please email simon.binney@wealthwizards.com

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This article was originally published by Professional Adviser on 1st November 2021 https://www.professionaladviser.com/opinion/4039071/simon-binney-structuring-business-digital-advice

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