Climbing the digital mountain

Digital: A search for the term on the InvestmentNews website produces 1,645 hits. Good news for advisers looking to top off this summer’s beach reading list, though you might have to upgrade your iPad. Alternatively, you could dodge the frenzy and stay on a path to your own version of a digital world.

I’ll try to make the case for making sense of the digital madness — with my objective as always to improve the adviser/client experience — and grow your successful practice.

A good strategic approach to all things digital starts with understanding your ambition. I like the mountain analogy because it’s a relative scale — you can select the “altitude” you want to achieve. As a starter, former Salesforce exec Andy Davidson, who’s now at startup Anaplan, created the view below of the trek up Digital Hill for our recent white paper on the transformation of the wealth management industry, Private Client 2020. Simple views make complex subjects easier to manage. https://s32566.pcdn.co/wp-content/uploads/assets/graphics src=”/wp-content/uploads2018/08/CI11651581.JPG”

So take a moment and ponder what’s the right fit for you. Are you OK sticking with a traditional offering, which is mostly all human implementation, or do you want to climb? Digital capabilities can be feathered into a practice in a progressive sequence — it is not an all-or-nothing decision. The most important question to ask yourself is always the same: Why? The answer needs to be rooted in your sense of the mission, that of better serving clients and providing an outstanding workplace for your associates. How can digital tools help you achieve those objectives? Then go looking for the solutions.

What kind of mountain trail do you prefer: Double Black Diamond or a comfy Green Trail? What kind of practice best fits your future view, your target clientele, your time horizon for optimizing your practice — and your management style? Each aspect helps guide your planning, since the whole idea of climbing is that it is a dynamic process of continuous improvement. There is a huge difference between measured and incremental progress toward a defined goal and a spinning gerbil wheel of activity that confuses clients and colleagues. The Knights of Fintech all want to enlist you in their crusades — pick the level of conquest you want for your team and tune out the rest.

Taking the noise out of your digital plan is critical for your associates, your clients and you. Every industry news day brings the announcement of new “must-have” innovations and new winners of some funding contest — alongside the obituaries of capabilities you probably have in your practice. God bless Michael Kitces, whose single slide depicting the array of fintech logos paints the graphic reality of too many ideas chasing too few buyers.

Shouldn’t we first ask where digital solutions best fit? The answer begins with the effort to do three things better — provide time for you and your associates to do your jobs, achieve better consistency of results for clients and greater simplicity for both clients and your team.

The most basic digital solutions will make the biggest gains as well, so your early steps are incredibly lucrative. Getting things done by machine is not a loss of control, it is liberation from minutiae and capacity to do more, better work. But to liberate, you first have to embrace the road to freedom and I remain puzzled by the reluctance of some advisory firms to fully catalog their clients within a CRM.

A great friend and longtime physician was complaining about how his partners told him the practice was committed to automate patient records and he needed to “get onboard.” I had to explain why they were correct — join the 21st century! As a patient I’m not going to go chasing after you for a manila folder when I have a medical problem — especially if I’m traveling.

The biggest gains from digital tools flow from the most basic, foundational additions, like the CRM and full automation of client records, followed by full adoption across the practice. Most multi-adviser practices have an associate like my doctor friend. Get onboard! From a true time management perspective, consider top advisers who diligently seek out cost bases and correct beneficiary designations when onboarding clients. That’s a trust builder and a huge investment that pays dividends later in the form of saved time, consolidated assets and referrals.

Adoption is the new innovation. While it may seem incredibly basic, most of today’s wealth management offerings are “tweeners” — traditional human-driven processes with a sprinkling of digital solutions. Most have some tools but have not incorporated them across the board. This is really the worst situation of all because it creates additional variations in your processes — confusing clients and associates and compounding the complexity of managing it all.

The two most important guiding principles for successful digital investments are integration and adoption. If you cannot fully integrate a capability across your practice you might be better off without it and deal with the consequences — and the missed opportunities — until you have the bandwidth to commit fully. A plea here to the Knights of Fintech: your Holy Grail is enduring customer success, not short-term sales to prime the IPO pump. So walk the talk and focus on full adoption of your marvelous tools. That sets you up as a business partner for life.

The importance of building seamless, integrated experiences is the true calling of the client-centric practice. Digital can help, but you need to know exactly how — for your practice. We’re all watching some pretty sharp aggregators attract new advisers and assets by focusing on integrating digital capabilities. If advising clients is easier, your platform will attract more and better advisers.

The seamless experience flows from an ecosystem of many capabilities chosen to complement each other. But it also takes persistence to ensure full adoption so you can truly unleash the vast potential of fintech innovation and reap the rewards. The most rewarding climbs — in hiking or in business — begin with a firm grasp of the target summit and the commitment required to get there.

This is a blog — what do you think? Let me know at [email protected]

Steve Gresham is former head of the Private Client Group at Fidelity Investments, an adjunct lecturer in public policy at Brown University and principal at The Gresham Co.