How tech is amplifying the role of the financial advisor
The rapid expansion of social media and artificial intelligence within the financial services space holds undeniable implications for the advisors/client dynamic – particularly when it comes to young investors. Is digitization on its way to making one-to-one planning and advice obsolete? In a word: No.
This was the topic of a recent episode of The Flexible Advisor, featuring Ryan George, Chief Marketing Officer of Docupace, a tech company specializing in automated workflow and document management solutions for financial services firms. Ryan shared insights from his firm’s research regarding the needs, approaches, and attitudes of younger investors in today’s environment.
Many of us tend to categorize the Millennial generation as “young.” George explains why this is a mistake. “I fall into the millennial camp and I turned 40 last year. Many of us have professional degrees, professional careers, and we are accumulating assets. Millennials now account for about 13 million households, with almost $2 trillion assets. They are specifically looking for wealth management guidance. Some of the things happening in the economy are steering people towards more sound advice; they're looking for an expert. I think it's a beneficial for an advisor to step into that.”
“When it comes to a making key decisions people still look for human advice.”
– Ryan George
A primary aspect of doing that successfully, said George, is to recognize that the younger generation views money differently than their predecessors. This is detailed in his firm’s recent white paper — Five Ways to Capitalize on the Changing Attitudes of American Investors.
Will digitization make one-to-one advice obsolete? In a word: No.
There are circumstances that require human interaction.
Millennials represent 13 million households and $2 trillion in assets.
Technology is changing the investment landscape, but to what extent? According to George, “The assumption is that older investors would rather stay away from digital tools and apps. But, at this point technology has been part of our lives for so long that most people are somewhat comfortable with it. Our research found 4 in 10 respondents saying they used technology to manage finances more during the pandemic than ever before. And that carries through to today. Nevertheless, when it comes to making key decisions people still look for human advice.” The point, he said, is finding the balance between what's good for advice versus what's good for basic access. “A mobile app provides access to your funds; you can monitor a portfolio and even do some trading, but you're not looking for the app to give you advice. This is where engagement with the financial advisor comes. The human supportive part, the element that can’t be replaced by technology, is when a client is looking to make a move or actually talk something out.”
In other words, while there are plenty of financial planning tools out there for advisors and clients alike, there are circumstances that can only be satisfied through human interaction. George offered two examples: “When a client calls to say, ‘I'm nervous about what's going on in Washington,’ or ‘My wife is stricken with cancer, how does that impact us?’ technology is not equipped to offer an opinion or guidance. This is where a human can step in to listen, discuss, and support. What's interesting is that an advisor can use a tool like ChatGBT to test run various responses to different types of questions and consider potential responses. That might help to provide guidance and context, but it's the human that’s out front delivering that advice. I think that's key to remember. The two together offer the biggest uplift.”
George sees three key themes that can drive the acquisition and retention of next-generation clients:
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