Fidelity research shows COVID-19 steering advisers toward technology

Financial advisers temporarily pulled back from client prospecting in the immediate wake of the COVID-19 pandemic, but as businesses start to reopen, the advice industry appears to be discovering a new path toward new business.

There is nothing quite like a forced shutdown of an entire economy to drive even extreme technophobes toward digital answers. That’s essentially what has been unfolding in the financial services industry, according to new research from Fidelity Investments.

With an average age in the late 50s, nobody expects financial advisers to live on the bleeding edge of technology, but Fidelity’s research shows that when forced, advisers will embrace the digital world.

The survey of more than 400 advisers found that use of video conferencing for client interactions climbed to 14% since the pandemic hit, which doesn’t sound like much until you consider it was around 7% pre-pandemic.

“We’re keenly interested in learning how advisers are adapting to digital engagement,” said David Canter, head of Fidelity’s registered investment adviser and family office segments.

The survey showed that two-thirds of advisers reduced their focus on client prospecting earlier this year as the coronavirus was spreading across the country, but as things started to calm down, Canter said the demand for wealth management came back with gusto.

“During the COVID-19 pandemic advisers have been stepping up to help clients navigate the complex emotional and financial impacts of this crisis while continuing to manage their businesses,” he said. “Increased demand for financial planning and advice has led many firms to rapidly pivot how they engage with prospects and clients in a virtual environment. This crisis has been a catalyst for growth-oriented advisers to embrace more digitally-minded business development strategies.”

April Rudin, president of the financial services marketing firm The Rudin Group, said the increased use of technology by RIAs should lead to a better understanding of how digital marketing and communications is distinct from traditional means of communication.

“Prospecting today is about building relationships more than it is selling,” she said. “Advisers need new skills and a new tool kit in order to switch to more of a social selling strategy, where they are building relationships.”

With restrictions on in-person interactions that might otherwise include lunch meetings and industry events, Rudin said advisers need to embrace the idea of social selling, “which might take longer.”

While it might seem counterintuitive that leveraging technology can mean becoming more patient when it comes to building relationships, Rudin said it requires a different way of thinking about communications.

“The survey seems to uncover that more time is spent nurturing prospects into clients, and prospecting itself is different,” she said.

To that point, Fidelity has compiled a comprehensive workbook and outline for advisers looking to upgrade the digital marketing game.

The full e-book covers everything from an overview on digital communications to tutorials on utilizing and connecting through websites, social media and email.

Candice Carlton, senior vice president of adviser education at FiComm Partners, said the need to embrace technology was not borne out of the pandemic, but the pandemic did bring the benefits of certain technologies to light for a lot of advisers.

“To stay relevant, it is critical that the adviser of today stay connected in a high-touch, digitally enhanced way to drive loyalty, trust and wallet share,” Carlton said. “Clients now expect their advisers to add value beyond the traditional financial plan and twice a year in-person meeting. As this study indicates, advisers need help in learning how to adopt and use modern communication mediums to supercharge their prospect and client experience.”

Meanwhile, this increased focus on technology is not expected to suddenly flip a switch away from traditional in-person interactions with clients and prospects.

“We humans have short memories and once we can engage again in a risk-free environment, I think we will revert to some of the old habits,” said Canter. “But that doesn’t mean these digital tools aren’t important.”