Firms Need to Embrace Technology and They Need to Do It Now



As we know, the financial services industry is known for its slow uptake of new technology, favoring instead the ‘tried and true’ tactics of the past over ‘risky’ or ‘new’ approaches. The problem, however, is in an industry fundamentally reliant on participant engagement for measured success, it’s imperative to meet people where they are, to talk how they talk, to engage how and where they engage, and to help them the way they want and need to be helped.


Redtail CEO Brian McLaughlin noted in a recent NAPA piece titled Opportunities for Advisor Adopting New Communication Technologies, “Due to the nature of the industry, particularly in terms of its regulation, financial services is often significantly slower than others to embrace new communication technologies”. He believes this will change in the near future though. “We expect technology like texting and video calls to become more widely used among financial advisors as they experience increasing demand from clients to leverage the technology – and the need to handle growing pressure from fee compression to use their time more efficiently than ever.”


Surely the old way is often a safe bet, but in a world demanding scale, personalization, and speed more than ever before, is it really? It seems instead that safety does not exist in the known ways of the past, as those ways are based on methods of communication and business models that are no longer standard. Instead, a rapid evolution is not only needed but required as financial strife continues to plague the workforce with increasing intensity. In fact, a new study and its data suggests advisors can and should do more to effectively reach their target audience.


Polling more than 3,200 financial advisory professionals with respect to industry trends related to client communication, Redtail’s AdvisorComms 2019 survey shows that many advisors are indeed sticking to what they know (e.g. in-person meetings and phone calls).

Now, this is not to say these tactics don’t work. Rather, they are required. After all, according to the Redtail study, in-person meetings (76%) and phone calls (66%) rank highest for generating client engagement. This is to say though, they are not enough.


The survey also showed that ~90% of firm employees believe their clients would like to text, but nearly 30% of firms have a “no client texting” policy. This shows the acknowledgement and even desire for evolution… but because of the way things have been done, there are fundamental roadblocks to putting these communication methods firms themselves know will work into place.


“If you always do what you’ve always done, you’ll always get what you’ve always got.” - Henry Ford

At this point, a vast majority of firm employees express interest in texting but “40% of respondents’ broker-dealers have not approved texting as a form of communication with clients.” Further still, 31% of those who responded to the survey said they plan to adopt texting as a communications channel within the next year. Now, this is great news but forward motion requires that broker dealers and firms make rapid moves to change their policies. They need to remove the barriers to testing new technology and they need to do it now if they have any hope to launch a comprehensive program within 12 months. This “no client texting” policy is not the only old way of thinking that has seen its day.


Firms know they need to deliver a customized experience and guidance for participants. After all, financial situations are never one size fits all. Print newsletters (10%), podcasts/radio (3%), and webinars (2.7%) showed the least amount of engagement from clients, again according to the study. Personalizing content was highlighted as the top challenge by 45% of respondents. Other challenges noted were: client engagement outside of semi-annual meetings (40%), producing unique (30%) and consistent (28%) content, and client unavailability (28%).


But, context is king. Since the industry has operated as it always has, and layered ‘new age’ tactics on top of an older foundation, can firms fairly assess what powers employee engagement? We believe that having a solid, connected base where tried and true engagement tactics can live and grow with the technology required to power scale, access, personalization, education, and knowledge is vital to know what works and what doesn’t.


Then why, even though the technology exists, do 22% of respondents not tailor content to their clients? And of those who do, the survey found that less than 6% consider any client characteristics outside of age, income, gender or education for the purpose of crafting tailored client content. The remaining tailor their communication based only on age (73%), income (44%) and gender (28%). Further, nearly half (48%) of firms do not tailor content and comms; the same percentage do not communicate with clients’ families at all.

“Both clients and prospects want to feel like they are more than their demographics alone and communications that reflect their advisor is interacting with them as an individual can bolster their confidence in the relationship”, Redtail emphasizes.


When asked what their communications budget was being spent on this year, the top five budgeted items, accounting for 90% of all respondents, included:


  • upgrading tools, technologies or processes (33.8%)

  • improving the quality of existing communication assets (26.3%)

  • engaging more on social media (13%)

  • hiring dedicated staff (10.6%)

  • launching new communications campaigns (9.4%)


McLaughlin emphasized that “[they] anticipate that once advisors start tailoring their communication directly to clients and prospects, they will start seeing a greater return on their investment, especially in terms of utilizing the technology available to them.”

So what are advisors supposed to do? Well, keep it simple. Start by removing the friction. If your firm is not allowed to email or has inhibiting compliance processes that prevent participant communication digitally, work to evolve that policy. This change is necessary and will take place. Then move to texting if that initiative is on your roadmap for 2020. If not, test with email. See what works. Get used to working with compliance in your newly established way. Integrate a technology platform that—yes, may require some set up and training—but will also in the near future make your job easier, your efforts more effective, and your participant outcomes better.


According to the NAPA article: the survey of 3,200 wealth management employees was conducted in September 2019 and included those with AUM ranging from $100 million to more than $1 billion, with the majority of respondents (87%) working for financial advice firms with 1-15 employees.

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