Advice Matters

Monday March 25th 2019

For financial planners, advice is the key deliverable. We will keep you up to date regarding trends, ideas and other important issues relating to advice. Please contribute to the advice discussion and feel free to comment on any of the articles we post. We value your opinion. You’re also very welcome to share the articles with your friends or colleagues.

The latest Advice Matters articles are reflected below.

How can I use digital advice to create stronger client relationships?

2019 is here and what better way to start off the New Year than focusing on new possibilities and an innovative way forward!

Bill Bachrach, who has written several industry best-seller books, was recently quoted in Moneyguide Pro saying that the single most important thing that will impact you (as a financial planner) and your client’s future is the ‘singularity’ phenomena. According to Wikipedia, technological singularity is the hypothesis that accelerating progress in technologies will cause a runaway effect wherein artificial intelligence will exceed human intellectual capacity and control, thus radically changing society.

We are living in an era of advanced technology and have all the information we need at our fingertips. By today’s standards, a mobile phone has more computing power than what was used to put man on the moon in 1969!
At this progressive rate, our clients are exposed to numerous innovative and cutting-edge technologies and solutions to cater for their needs, including those linked to financial advice.

It’s important to be aware of the impact of technology and prepare for the runaway effects of artificial intelligence and how financial advice fits into this going forward. Digital financial advice will continue to have an impact on the way we interact with our clients and service providers. Therefore, we have to understand how technology is changing the way we will do business in the future. This means that our planner practices will have to constantly adapt and deliver, often at great costs in terms of expense and time. One alternative is to partner with providers that can help you stay ahead of this accelerating curve. When this resource is outsourced, it provides the necessary support, infrastructure and development research to stay on trend.

Evidence from a recent US study conducted by Capgemini’s annual World Wealth Report suggests that high net worth individuals (HNWIs), especially those under the age of 40, find automated advisory services very appealing. A staggering 87% of these HNWIs expect “all or most of their wealth management relationship to be conducted digitally over the next five years”. These individuals will also make use of robo-advice to meet their wealth needs. Therefore, we need to consider how we will address and mitigate this risk.

One of the reasons sighted for clients preferring digital advice is the lack of confidence in those that manage their wealth. What is staggering is the belief that clients feel that their needs are not understood. They are also of the opinion that services offered in the industry are linked to selling a product and facilitating financial transactions. Advice is also misinterpreted and related to the products and services offered. It is therefore no surprise that clients also have a perception that we tend to place too much emphasis on complex solutions and technical language that they don’t understand.

Clients feel that they are not being heard or understood and also feel overwhelmed by technical financial concepts and terms. As such, the competition between planners and technological devices is very real.
The survey implies that there is a disconnect in what clients want and what planners provide. Online digital tools offer simplified options with comparative illustrations matching clients’ needs. As such, it is easy for clients to implement a financial solution (previously offered by you) on their own.

Fortunately, planners can alleviate the risk of losing their clients to the digital era. It is argued that digital advice cannot compete with the human aspect of having a meaningful conversation with a client. A machine will never be able to have emotive responses to conversations around aspects such as showing interest in what’s keeping your client busy in their lives right now. A machine can also not support a family that is going through life changes like divorce, death, illness or job losses (to name but a few).

These aspects talk directly to a two-way conversation. Although artificial intelligence definitely has its place, people skills can’t be reproduced in this space. Therefore, client connections that capture compassion, kindness, empathy, encouragement and support is the trump card. Your client relationships honour the essence of human interaction and can’t be replaced by a computer.

Building competence and developing these skills will significantly contribute to keeping your clients loyal to you – even as you compete with a rapidly changing digital environment. Your relationship with your clients must never be underestimated. Always be aware of the language you use and keep it relevant to your client’s unique circumstances. You need to be willing to embrace personal development in this area.

This does not mean that you should ignore technological advancement, but rather combine your human and tech skills to the benefit of your clients. An example is to offer automated advisory capabilities to your clients. You could develop or innovate your own capabilities or partner with providers that can support you in this. Also revisit your current client engagement process and skills to ensure your clients pick you over competitors.

Our financial planning coaches together with our business coaches are here to help you stay on trend and emotionally connected with your clients. It is our objective to promote and inspire you toward developing your client experience with meaningful conversations navigating the way forward in today’s ever-changing digital world.