Technology Column

How technology will amplify the humanity in financial advice

Powered by data and analytics, the human component of advice will become even stronger

Jul 10, 2017 @ 2:08 pm

By Naureen Hassan

Money is deeply personal. Every day, we wake up to a world in which we're sending kids off to college, paying health care bills for unexpected illnesses, or worrying about the realities of retirement. Our life events are usually inextricably tied to money, bringing with it a fair share of angst and joy, all at the same time. With every significant milestone we need the support and guidance of those we trust most. This is why human advice is so incredibly important. The financial adviser plays a critical role guiding and coaching clients through life's complex decisions to help meet their life goals.

Despite the seemingly "inhuman" nature of technology, the advent of digital tools in wealth management is hugely exciting. Why? Technology is going to amplify the humanity of financial advice.

(More: Advisers envision a disrupted advice industry if Amazon shows up)

For example, what if, through technology, advisers could better anticipate their clients' needs and give even more customized advice? Powered by data and analytics — the human component of financial advice becomes even stronger, with technology helping advisers to strengthen their client relationships.

Across industries, technology is binding peer-to-peer relationships, revealing more of the human component. According to a recent Accenture report, research shows that investors want a combination of automated and human advisory services and that significant numbers of millennials and Gen Xers have already turned to hybrid services. Despite all the talk about robo versus human, the tech-enabled adviser means more value creation for the client.

Although investors might have access to many financial information and investing tools, many don't have the expertise to manage their money. This includes digitally-savvy millennials who are expected to inherit $30 trillion in wealth and investments over the next few decades. Studies show that as millennials gain more wealth and their finances become more complex, they still prefer to work with a human.

This is why advisers must continue to maintain deep, trust-based client relationships. Today, advisers are plagued by administration, and don't have the capacity to grasp the needs of each individual client. But this is changing. With new digital tools, a big part of their value proposition will now be their ability to truly understand their client's' unique goals, and in turn provide timely advice on nearly every aspect of their family's finances. Multiplied by hundreds of clients with different goals, that's a huge task.

(More: Fintech sales take off after DOL fiduciary rule's partial implementation)

For me, for example, as a mom of two kids, my life is deeply dependent on technology. I shop for diapers on Amazon in a Subscribe & Save box. I remodeled my house by emailing my architect pictures straight out of Houzz. Even getting a coffee from Starbucks, I order in advance and pay with their mobile app.

On the morning of a major market event, like Brexit, though helpful, I don't just need a generic research report. I need to know how it impacts me personally. And I want that information in an email or a text because I'm likely in a meeting and can't take a call. However, I do want that personal human reassurance. With digital capabilities like texting or video chat, advisers will no longer have to be limited by an in-person meeting. They will be able to communicate quickly and effectively.

With the right technology, advisers can provide this invaluable service to their clients. After all, what clients care about most is meeting their own financial goals. They want to know their adviser understands these aspirations — especially during turbulent times — offering them personalized financial advice along the way.

The coming advances in technology will enable advisers to help meet those expectations by diving even deeper into what their clients need at a much greater scale. Rich data, analytics and machine learning will empower advisers with insights and actions that are applicable for every client in their book. No longer will they be held back by service oriented tasks. Technology will bind the adviser even more closely to their clients and reveal why the humanity of financial advice is irrevocably a part of wealth and value creation for decades to come.

(More: How technology will alter the role of human advisers)

Naureen Hassan is chief digital officer at Morgan Stanley Wealth Management.


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