How technology can help advisers boost their AUM

Now more than ever, advisers need to develop the confidence to adequately charge clients for the time and hard work that goes into crafting and maintaining a financial plan. The uncertainty stemming from factors like the current pandemic and ongoing market volatility reminds us that these are no ordinary times for advisers and their clients. Any adviser worth his or her weight should be working with clients to adjust plans in alignment with these factors, and charging fees accordingly.

With fee compression and subscription-based models putting pressure on advisers to monetize their businesses in different ways, and more clients and prospects expecting a more comprehensive, holistic plan, it’s crucial for advisers to adequately (but fairly) charge their clients — an advisory practice is a business, after all!

Since holistic planning requires more time and labor on the adviser’s part, it can be tricky for them to balance the time-spend with the fee to the client. If advisers become more confident in the plans they have created, they will feel more comfortable charging clients a reasonable fee for those plans.

One way to justify the fee with clients and convey the value being provided to them is to explain why a certain plan costs as much as it does by breaking down everything that went into the plan, from administrative work, to due diligence and to building the portfolio. Some of the financial planning technology platforms available in today’s marketplace enable advisers to comprehensively walk clients and prospects through all the workflows and processes involved in creating, monitoring, and amending financial plans via a digital client portal.  

Let’s be honest — advisers are good at building relationships and providing advice, but not all of them are good at running a business. But that doesn’t mean there aren’t solutions available to help them. Advisers can automate some of those time-consuming back-office and administrative tasks using various technologies, which can make their practices run more efficiently, effectively and profitably.

Consider the 2019 U.S. Advisor Metrics report from Cerulli Associates, which shows that “heavy” technology-using advisory firms have an average of $238.9 million in assets under management, compared to an average AUM of $106.3 million for their “light” technology-using counterparts. Interestingly, Cerulli found that heavy technology users spend 34% less time resolving client service issues and have 24% more time for practice management activities, highlighting the effectiveness of technology for increasing advisers’ ability to focus on the most important parts of growing their business.

With so much technology available to advisers, it can understandably be overwhelming knowing where to start, or ultimately which solution to choose. However, that should not deter advisers from adopting advanced technologies into their practices, since the difference in profitability highlighted in the Cerulli report is so crucial.

One suggestion for advisers is to look for two or three solutions that integrate well with how they run their business, and then become proficient at all of them. For example, advisers can consider one solution for financial planning, one for portfolio management and one for client relationship management to cover some of the most critical areas, but ultimately choose the ones that best fit their style.

By mastering these different technology solutions, advisers can become more confident in the plans they build and, in turn, feel more comfortable with the fees they charge for their advice, allowing them to run a more efficient and profitable business.

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Anthony Stich is chief operating officer at Advicent, which provides financial planning technology over 140,000 financial professionals at more than 3,000 firms worldwide.