When you shop online, your web browser tracks your Google searches and which products you click so it can automatically show you ads for related items you may be interested in. Amazon has a similar strategy to provide product recommendations, as does Netflix to suggest what movie or TV show you should watch next.
What if financial advisers had the same kind of insights on prospects and clients? What if an entire engagement — from the initial meeting to building a financial plan and opening an investment account, all the way through quarterly reviews — could be informed by and tailored to the investor's preferences?
This is just one vision for how emerging technology will affect an adviser's office in the future. At
Broadridge Financial Solutions' annual Get Connected conference, Steve Scruton, president of
Broadridge Advisor Solutions, discussed how his firm is trying to make it a reality.
For example, the technology exists today to better track how clients or prospects engage with an adviser's marketing, Mr. Scruton said in a panel discussion. Advisers can track the IP address of everyone who visits their website to find out more about who these people are.
Before the adviser makes that initial connection, they can learn about the prospect's interests or hobbies, and even what kind of investing strategy might be most appropriate.
"You can create, and we do, segmentation around folks that like gardening,"Mr. Scruton said during a panel discussion. "This is completely legal, publicly available data to communicate better to that person."
Now, that doesn't mean an adviser should take advantage of every piece of information available online. The fallout from the Facebook and Cambridge Analytica scandals shows what happens when companies don't respect personal privacy online.
(More: Facebook data privacy issue already identified by ESG investment screens)
Mr. Scruton said that even if the data collection is legal, advisers need to keep the moral question in mind. And showing up to the first meeting armed with information about the prospect's birthday and kids' names can be freaky, to say the least.
Sarah Simoneaux, founding partner of SCS Consultants, said advisory firms could use this information to ascertain some basic facts about a person's profile as an investor, such as whether they are accumulating wealth or already retired. But that doesn't mean it should all be handed over to an automated investing engine.
"The minute you say 'algorithm,' it scares the crap out of me," Ms. Simoneaux said. "I want someone who is going to say, 'You won't outlive your money.'"
While
many firms are using data aggregation, Ms. Simoneaux sees few that are doing it well. Many clients still have held-away assets that advisers don't know about.
"We've got to figure out a way to get those participants and plans," she said. "Mine your own data and find it."
(More: SIFMA issues guidelines for using data aggregation)
