Investing in new technology is only half the battle for financial advisers. They must also learn how to use it effectively, which can be easier said than done.
While there are many digital tools on the market that allow advisers to track and manage prospects and generate proposals, less then half of firms are tracking how many of those leads convert into paid clients, according to a survey by consulting firm F2 Strategy. Of the 31 chief technology officers, CEOs and other senior executives at large financial services firms F2 surveyed, just 42% measure how many prospects end up filling out client onboarding paperwork or funding an account.
About half of the firms that don’t track these metrics also say clients end up opening accounts with less than 75% of the expected or committed assets, meaning advisers are leaving money on the table, said F2 founder Doug Fritz.
While Fritz isn’t sure why firms aren’t paying attention to how successfully they move clients from prospecting software to paid client relationships – something he calls “onboarding viscosity” – it's an easy change firms can make to drastically improve organic growth.
“It seems from our data and commentary that the issues around onboarding viscosity show up as operations problems, not as sales problems,” he said. “If a client says ‘yes’ but then doesn’t sign the docs, it may be hard for the adviser to reach back out and find out what happened. If the client signs the docs but doesn’t transfer funds over, it’s likewise hard for an adviser to push the client to act.”
Advisers need to be trained on how to maximize their use of tools, how to track prospects’ progress through the onboarding process and when to follow up with those who may be stuck, he added. There's also room for improvements in the technology, especially around automating the onboarding process to make it quicker and easier for new clients.
“Digitizing the prospect journey so that the document approval process and asset transfer process are easy, fast and transparent is also a big part of it,” Fritz said, citing Salesforce’s recent integration with Schwab Advisor Services on account opening workflows as an example of a step in the right direction.
Some new fintech startups are launching to help advisers get the most of their technology tools, especially client relationship management software. At the 2022 Technology Tools for Today conference, CRM Science showed how it can help build a personalized digital experience for advisers using Salesforce. A critical component of the startup’s pitch to advisers involved tracking client relationships and data across households, and leveraging insights for future marketing or customer segmentation.
Another example is Catchlight, a company that originated in Fidelity Investments’ software incubator, Fidelity Labs, and fully launched at the T3. Using data gathered from more than 100,000 successful client conversions, Catchlight has developed an artificial intelligence program to recommend actions advisers can make with prospects.
The company’s ideal user is a registered investment adviser with a large book of leads but no idea which to call first, helping to alleviate the problem of onboarding viscosity with specific action, said Catchlight CEO Wilbur Swan. The startup recently integrated with Redtail to automatically pull information about leads from the CRM and identify business opportunities for advisers.
[More: Orion buys CRM provider Redtail]
“When we talk about the capabilities [with advisers], the first conversation is what are their goals for organic growth. We ask what conversion looks like today and we get a lot of blank stares,” said Yelena Melamed, Catchlight’s head of product. Many advisers “do not have a well set-up, measurable and repeatable process” for guiding prospects into paid client relationships, she said.
For advisers who don’t keep prospect information in a CRM, Catchlight can work with just a name and contact information by pulling from institutional third-party data partners, Melamed added.
While he hasn’t seen Catchlight in action, technology like it can help advisers be more impactful and meaningful to prospects and clients during the pre-sale process, Fritz said.
“Tools like this that help focus attention on the specific clients, as well as actions that will result in realized fees, will help a lot,” he said.
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