More advisers are embracing the virtual world

There's an increasing reliance on video conferencing and other tools to stay in touch with clients

Jun 7, 2015 @ 12:01 am

By Liz Skinner

When Kate Holmes launched her financial advisory business two years ago, she planned on rarely, if ever, meeting with clients face-to-face. Still, she decided to rent a small office near her home outside Las Vegas because she didn't think she would appear legitimate to prospective clients without a physical location.

“That lasted about two months,” she said. “People are busy, and the clients I attracted all seemed to want to Skype or FaceTime right from the beginning.”

Ms. Holmes now conducts meetings with her 40 clients on a virtual basis 99% of the time, and she can run her business, Belmore Financial, as easily from her parents' boat in San Diego Bay as she can from home.

Ms. Holmes, 31, is one of a growing number of advisers around the country who have never shaken hands with the majority of their clients. These mostly young planners have built advisory firms that rely predominately on video conferencing, the telephone and other technologies to communicate with clients. Many brick-and-mortar advisory firms also have armed their professionals with the tools to satisfy clients' increasing desire to receive their financial advice on the fly.

Only about 4% of advisers currently list video conferencing as one of the communications methods they use most often to personally reach out to clients, according to an InvestmentNews/Cambridge adviser technology study last year. But 32% of advisers expect to be relying on video conferencing to communicate regularly with clients in five years, the survey found.

Source: InvestmentNews/Cambridge adviser technology study

“If you don't have the ability to hold virtual meetings, you're a little behind on the tech curve,” said Daniel Lash, 40, a partner at VLP Financial Advisors, a 19-year-old advisory firm. “Millennials grew up with these technologies, and they already expect them in the workplace and from the service providers they work with.”

But it's not just millennials who are demanding virtual meetings with their advisers. People with hectic jobs, two-income households, parents of young children, individuals who travel extensively, and clients who just have busy lives or are tech-savvy are showing an interest in virtual meetings.

In a new report, McKinsey & Co. said the virtual advice model would not be making strides today unless a substantial number of mass-affluent and high-net-worth clients were already comfortable handling their finances at a distance. The consulting firm said surveys show that at least 20% to 30% of those groups would use a dedicated financial adviser who is not located in their area.

McKinsey's report goes on to say that in North America, about 10 million households with personal financial assets totaling $6.4 trillion are prime candidates for virtual banking, borrowing and investing services.

Financial advisers who have introduced the option of virtual meetings said it has led to an increase in the number of times they are able to communicate with clients each year — so-called touches — and is more efficient. It also can reduce overhead expenses by as much as 50%, McKinsey estimates, if the adviser doesn't need to rent an office.

(Related read: Why advisers are going virtual)

Jeff Powell, 46, an adviser with Polaris Wealth Advisers who meets virtually with about half of his 500 clients, said the efficiency of conferring with clients via mobile technologies can make advisers more productive, and therefore more profitable.

“Virtual meetings can be set up back-to-back, but when you're traveling in a car between meetings that just can't be done,” Mr. Powell said.

His favorite virtual meeting involved three siblings — one located in Oakland, Calif., one in New York and one in Zurich — who needed to make decisions about their parents' money after the death of their father.

The virtual encounter was so successful he ended up retaining the parents' money and earning new assets from all three of the children.

The location-agnostic focus of virtual advisory firms also makes them a natural fit for clients who may be retiring and moving to a different region of the country or for expatriates. Ms. Holmes, for example, already has clients who reside in New Zealand, Italy and Rwanda.

I never would have known those things if I hadn't been in their home through video.— Eric Roberge,  founder of advisory firm Beyond Your Hammock

Eric Roberge, 35, founder of advisory firm Beyond Your Hammock, said some of the remote meetings he's held since beginning his business 18 months ago have been more intimate than office meetings with clients at his former advisory firm.

With virtual meetings, clients often are communicating from their homes, he pointed out.

“I've met clients' young kids and pets and once learned about how a couple acquired a meaningful painting hanging on their wall,” Mr. Roberge said. “I never would have known those things if I hadn't been in their home through video.”

Although the investment advice itself need not change because advisers are communicating with clients virtually, the planning approach requires some tweaks when delivery comes via cyberspace.

“Sharing information changes quite fundamentally when you are not pushing a piece of paper across the desk or working side-by-side on a budget with clients,” said Daniel Gourvitch, a partner at McKinsey. In a virtual interaction, an adviser must make sure the client is viewing the correct information. The adviser also may need to ask more questions to be sure the client understands the material, because it can be difficult to judge that through a screen or over the phone.

“But there are some opportunities also because digital platforms allow you to do things more dynamically,” Mr. Gourvitch said. For instance, voluminous paper financial plans can be replaced with dynamic visualizations online.

Mr. Gourvitch said certain types of financial advisers will be better than others at communicating virtually. It goes without saying that advisers need to be comfortable themselves with the digital tools, but individuals who can build trust easily over the phone and are “operationally and personally efficient” will be best at servicing clients remotely, he said.

Advisers communicating virtually should be extra cautious about information security and be willing to invest in high-end equipment and software, said Blane Warrene, a financial technology consultant and founder of QuonWarrene.

Trouble is likely brewing if clients can't download a statement to a secure portal.— Andrew McFadden,  founder of Panoramic Financial Advice

“The technology is out there, but be selective,” Mr. Warrene recommended to advisers. “You'll have to spend more than advisers who meet in person if you want to create a client experience that offers the same service level.”

Technology failures most commonly occur on the client end, advisers said.

Andrew McFadden, founder of Panoramic Financial Advice, mostly communicates with clients virtually, and he finds they sometimes think they are more tech-savvy than they actually are. For example, trouble is likely brewing if clients can't download a statement to a secure portal, he said.

Mr. McFadden, 31, said that when clients are located near him in Fresno, Calif., he prefers a face-to-face meeting at first, but he doesn't do that with clients who are from out of town. His farthest client is in New Jersey.

Some advisers don't believe a virtual advice experience can ever be as effective as sitting down face-to-face with a client.

“There's something about people's reactions to certain things you say that you don't pick up when you're not with them,” said Pete Benson, 56, chief executive of Beacon Capital Management. “There's a lot of intangibles that you don't get when you're talking over the phone or via computer.”

Every year, more and more clients want to meet virtually with him and Beacon Capital Management's other three advisers, but it's not his preferred way to do business, Mr. Benson said.

“There's something about a client shaking your hand and looking at you face to face,” he said. “I don't know if you can give that same level of service virtually.”

Meanwhile, Ms. Holmes is spreading the word on running a virtual practice. She is speaking at the Financial Planning Institute of Southern Africa conferences in Johannesburg, Durban and Cape Town in September about how she's built an entirely virtual operation.

“It's been fun to see the international interest from clients, prospects and other advisers,” she said.


What do you think?

View comments

Upcoming event

Jul 09


Boston Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.


Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print