The key driver of your success will be your humanness, not your technology stack. You will need new technologies to keep pace with your competition and efficiently provide the baseline services expected of a financial advisor. But those technologies will be table stakes. Everyone will have them.
It’s no secret. Technology is rapidly reshaping our industry. The change is happening so quickly it’s hard to keep up. Every aspect of your business that can be automated will be automated.
In the future, you will sit in a tech-driven cockpit that will put the tools of your trade at your fingertips. The cockpit will look different for every firm. Its size and shape will be determined by the needs and preferences of each firm and its clients.
The new technology will certainly make you more efficient and give you capabilities you didn’t have before. But it will also change how and where you add value.
Activities that formed the cornerstone of your value proposition will no longer do so. Services like investment management, financial planning, rebalancing and tax-loss harvesting are being automated and offered online at low prices. Their perceived value is shrinking.
If you continue to offer only the services you offer today, it will be difficult to survive. To differentiate your firm from others, and to maintain your current revenue stream and profitability, your business will need to evolve.
In a world where everything that can be automated is automated, you will need to develop additional services that are highly dependent on personal interaction with your clients. You will also need to create a more personalized experience for your clients and establish an emotional connection with them.
Here are five ideas to build your humanness.
Most firms do a miserable job of client profiling. This isn’t necessarily their fault. Most advisors are not trained psychologists and most tools for client profiling lack a firm scientific foundation.
This creates a number of opportunities for the wise advisor. Improving your capabilities in the area of client profiling provides a concrete basis for differentiating your firm from others.
A comprehensive client-profiling process puts the focus on clients and makes them, rather than their portfolios, the center of attention. Creating solutions based on each client’s unique characteristics makes the process more personal and enhances the client’s experience.
A well-designed profiling process improves client retention. Understanding a client’s behavioral make-up allows advisors to create portfolios that clients are more likely to stick with long-term. This is good for clients and helps advisors retain clients over the long-term.
Client profiling also allows advisors to add value over time. A client’s behavioral profile is not static. It can change through the years. Thus, client profiling should be an iterative process that requires ongoing involvement and monitoring by an advisor.
Further, client profiling is hard to fully automate, in part, because behavioral profiling is not an exact science. There is no automated tool that can give a precise answer about how a client’s assets should be invested. Only through collaboration between client and advisor can an appropriate course be determined.
Successful advisors will be educators. They will inform and prepare clients to behave as successful investors. Firms that fill the role of behavioral coach in a systematic, process-driven way can add loads of value.
Here’s why. There are two things that need to happen for a client to reach their financial goals. The client needs a good portfolio designed to maximize the chance of hitting those goals. Second, the client needs to stay in place long enough for that portfolio to do its work.
You can teach a client how to behave like a successful long-term investor. Just as soldiers and athletes are taught to do the right thing in chaotic situations, so, too, can investors. Telling them to stay the course once the bottom drops out of the market is not enough. You need to prepare them for the inevitable bumps they will encounter.
Enhancing the client experience involves moving from thinking about the client’s destination to thinking about creating an outstanding journey.
When we think about the destination, we think about how to get clients from where they are today to where they need to be. Clients become problems to solve. We identify their goals and time horizon. We calculate what they have today and what they will need in the future. Then we prescribe a plan to get them there. How they feel along the way is not our primary focus.
Creating an excellent client journey means recognizing that there are many ways our clients can get to their respective destinations. It means moving from thinking about “my offering” to personalization based on client preferences. By co-creating the journey with the client, you gain a competitive advantage and create a unique and satisfying client experience.
Think about every aspect of how you serve your clients. How can you make improvements that reflect the needs and preferences of your clients? How can you give them flexibility and choice? We often think about how we can use technology to make our businesses more efficient. Think, instead, about how to use it to make life easier and better for your clients.
The availability of so many channels of communication should make communication easier and better. The opposite is true – clients are needlessly inundated with information. Here are some ideas for dealing with this issue.
Be where your clients are. Find out how your clients want to interact and make sure they have that option.
Alter how you communicate. The format for effective communication has changed. Shorten all communications, using videos, and use online meeting services rather than forcing clients to come to your office. Communicate in ways that are appealing to clients.
Be responsive. Study after study has shown that one of the main reasons for client dissatisfaction is lack of responsiveness from their advisor. To stand out favorably, respond quickly and personally to your clients or prospects.
Finally, create the sense you are always standing by. We live in a 24/7 world. Clients want access to you. They want to feel your presence. Use your website, blog, social media and other tools to create the sense that you are always accessible.
Your website is what your face used to be. You used to get clients by meeting them in person. Now, their first encounter with you is likely your website. You’ll never get a chance to meet them face-to-face if they don’t like your website.
Most advisor websites are very similar – similar words, similar imagery. Lots of facts. Very little personality. No way for a prospect to get a feeling for who you are and your values.
Give prospects the basis for differentiating you from the other firms they’re going to evaluate. And give them a reason to like you. Be genuine.
Clients are looking for an emotional connection. They want to feel something. They want to be part of something.
Don’t focus on what you do. Focus on who you are. Unless your offering is very unique, it is hard to explain to a prospect how your services differ from those of other advisors. It is much easier to differentiate yourself based on your unique personality and experiences.
Focus on your humanness
The essence of the relationship between an advisor and a client is a deeply personal one. Build your offering on that basic truth.
Don’t let all the changes in technology, products and fees distract or depress you. Take your time, and be thoughtful. If you stay focused on satisfying your clients and meeting them where they are, you will have a wonderfully successful business no matter what the future may bring.