How technology is transforming financial advice: Schwab’s Hathi

The independent registered investment adviser industry is experiencing a major shift that is being driven by advisers’ recognition and adoption of new technologies.
Many forces are driving the changes under way: The mobile lifestyle of the increasingly affluent “Generation Now” (high net worth 30-45 year olds), evolving models and new competition for the delivery of financial advice, and the wave of retiring boomer-generation advisers transitioning their firms to the next generation. This combination of factors is compelling independent advisers to adopt and integrate technology across all facets of their firms.
Advisers are moving beyond seeing technology as a back office support function and are beginning to take advantage of the power of technology in enhancing the client experience and ultimately supporting smart, sustainable business models with legacy value.
According to the 2014 RIA Benchmarking Study from Charles Schwab, firms that take an integrated approach to their technology are among the top-performing firms. The study found that the best-managed firms (the top 20% of qualifying firms ranked by productivity, profitability, revenue growth and net asset growth) have created operational discipline to support the client experience and create business efficiencies that can help firms continue to grow and be successful for decades to come.
Client-centric, responsive and flexible
Advisers who are successfully implementing technology are keeping clients at the center of their approach. They are using technology to improve the client experience through more efficient and responsive firm operations. In practice, this means staying connected with clients anytime, anywhere and delivering an enhanced, personalized and relevant experience.
(Check out these top tech trends for advisers)
One of the first steps to creating a scalable client-centric model is creating a firm-wide repository of client information — leveraging a client relationship management (CRM) system — that enables firms to effectively manage client information and anticipate client needs. With the CRM, an adviser can track client data, referrals, share and manage documents, and send and receive communications.
Not only does this infrastructure enable a client-centric approach with existing clients, but as RIA firms increasingly consider how to maintain a high-touch approach with emerging clients and smaller accounts, scalability becomes even more critical. Twenty-eight percent of firms in the study reported that implementing a client segmentation plan is a strategic focus for their firm in 2014. Technology can help them create a flexible service delivery model that can also be customized to unique segments of a firm’s client base. This type of scalability and firm-wide relationship management also helps founders prepare for succession, furthering the value of technology as a driving force in activating these plans.
Improving everyday client interaction
We’re seeing RIA interest grow steadily in technologies that impact day-to-day interactions with clients. Mobile, cloud and social applications of technology can both save them time and take their client-centric approach to new levels. According to our study, twice as many firms reported that they are focusing on online and mobile portals for sharing information with clients, and significantly more firms than in years past are focused on mobile account access.
Additionally, mobile solutions can help advisers connect with Generation Now who are accustomed to communicating 24/7 and represent a significant opportunity for independent advisers. According to Cerulli research, this demographic currently controls nearly $3.5 trillion in investable assets. Seventy-five percent of advisers polled in the recent Investment Advisor Outlook Study (Wave 15) believe the Generation Now investor will come to expect an anytime, anywhere service model, which means mobile and cloud technologies are not only the price of entry for appealing to this client segment, but will also be essential components for firms as they plan their transition to the next generation of leadership.
Technology-enabled, one-on-one relationships
Advisers are seeking and adopting technology that can enhance their businesses. But there is no magic formula for success — the latest and greatest technology upgrades can only do so much. It’s the adviser’s role to implement technologies that can help their firm run more seamlessly — from CRM and portfolio management to online delivery portals and apps — and then create the right processes and discipline in their firm to ensure that the use of these tools are optimized to meet the firm’s long-term objectives.
As clients evolve, so too do the technology needs of advisers. While nothing can replace the primacy of the personal, one-on-one relationships that independent advisers have with their clients, the right technology can support, enhance and scale the “know me” experience.
It will be exciting to see the role of technology evolve in helping advisers build the businesses they want and deliver the financial advice their clients need.
Neesha Hathi is senior vice president, Schwab Advisor Services
An executive summary of the Charles Schwab Generation Now Study for RIAs is available here.