Amid volatility, tech that proves an advisor’s value will thrive

There's new pressure on advisors to clearly demonstrate the value they deliver to clients, and technology will play a key role.

During the bull market of the previous decade, when double-digit annual returns were commonplace, advisors didn’t have any trouble justifying the fees they charged clients.

Things are different now. After many portfolios lost money in 2022, clients are asking questions about returns, fees and what other options are available to them. Market volatility doesn’t appear to be going away, so there’s new pressure on advisors to clearly demonstrate the value they deliver.

How financial advisors respond will be a crucial story over the rest of 2023, and technology will play a key role.

For many, it will mean adopting new tools that allow them to offer services they traditionally eschewed. For example, direct indexing technology, which firms acquired en masse in 2021 and are now starting to offer as an integrated part of investment management tools, allows advisors to demonstrate their acumen for tax optimization, said AssetMark president Michael Kim.

“In this environment, people are looking for after-tax returns,” Kim said. “It’s a great way for advisors to deliver that tax alpha and share the impact and benefit [with clients].”

In addition to direct indexing, technology can help financial advisors deliver other services that were previously available only to the ultra-wealthy, such as digital estate planning and philanthropy, Kim added. Other fintechs are looking to give advisors a way to offer things like health care and longevity planning.

“Technology can really help advisors go up-market and bring family office services to high-net-worth investors,” he said.

Advisors are also looking at new technologies that could improve services they already offer, such as financial planning.

They’re also looking for ways to better demonstrate the value of the financial planning and portfolio management services they already offer, which is benefitting a new and rapidly growing category of fintech companies providing “advice engagement.” XY Planning Network co-founder Michael Kitces described advice engagement as one of the fastest growing categories of advisor fintech in recent years as advisors look to provide ongoing, year-round advice that justifies the advice relationship, and fees, after the initial planning process.


The idea has been around for years, but market conditions are forcing advisors to step up their game, said Adam Holt, founder and CEO of advice engagement fintech Asset-Map, which offers a tool for advisors to provide a visualization of a client’s entire financial life. It’s no longer convenient to have a tool that proves the value of advice to clients, it’s becoming expected, he said.

“Consumers are becoming more intelligent and have a lot of options today for asset management and product placement,” Holt said. “When people were making money, clients were not complaining. When you’re down, clients now want to get in and inspect what’s going on.”

Advice engagement tools can also help clients better act on the advice and plans they receive, said Michael Lecours, chief financial officer of fpPathfinder, which creates workflows and checklists for advisors to continually serve clients.

‘It’s taking the work we’re already doing and packaging it up in a certain way that can go in front of a client and show value,” Lecours said.

In a year where interest rates and volatility will remain high, expect these technology to grow increasingly popular across the entire advice industry.

AI and the other technologies advisors need to improve client experience

Related Topics: ,

Learn more about reprints and licensing for this article.

Recent Articles by Author

We need to talk about Method Man and Redman’s performance at Future Proof

"For a conference billing itself as the future and inclusive to all, this was the opposite and seemed tone-deaf,' says one person who attended the concert.

Finra asks SEC to extend remote inspections program

The rule allowing such inspections is due to expire at the end of this year, but Finra has asked to delay the expiration until June 30.

New Jersey chooses Vestwell to administer retirement savings program

Its plan, which will be rolled out in 2024, is the seventh state auto-IRA to partner with the digital record keeper.

Future Proof plants its flag in the advisor industry event circuit

In its second year, the beachside conference attracted almost 3,000 attendees, nearly double last year’s attendance.

TIAA hires six new leaders for wealth management team

The executives, all of whom are joining from other firms, will complement TIAA's current staff 'to help clients prepare for retirement and reach their financial goals,' an executive says.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print