Should You Include a Digital Investment Solution in Your Practice?

Posted by James Capps, Vice President, TCA Technology on March 5, 2018

With the rise of so-called robo-advisors such as Betterment, Wealthfront and Ellevest in recent years, independent financial advisors now have a new form of competition that didn’t exist all that long ago. The advent of robos have made it more important than ever for you to take advantage of your “human touch” that automated investment solutions like robo-advisors can’t provide.

But before you dismiss this technology as nothing more than competition, you may want to consider how you can take advantage of the efficiencies that robos provide and incorporate a digital support tool into your business. This could help streamline investment management and risk profiling and expedite new client onboarding, especially for smaller accounts on which you can’t afford to spend as much time.

Available tools can help you handle the administrative tasks involved in new account openings and back-office tasks more efficiently. They enable you to scale your practice while maintaining your own investment strategies and model portfolios.

Automating Routine Tasks

In a recent blog, the director of financial services strategy and marketing at Adobe pointed out the obvious for most financial advisors: “There is only so much time in the day,” he said. As a result, “most financial advisors are only engaging with a portion of their book of business and prioritizing the customers of highest value.”

Given the fact that face-to-face interactions between you and your clients remain essential, tools that enable you to automate routine administrative tasks are more important than ever. This includes digital investment tools, which free you up to engage personally with as many clients as possible while continuing to offer them a high level of personalized service.

High Expectations for Technology

Financial advisors today have high expectations for the technology they use in their practices. They expect technology to minimize the time spent on administrative busywork to maximize the time they have to spend providing value-added service to their clients.

The good news is that digital investment tools are expanding beyond client onboarding and risk profiling to offer you more comprehensive portfolio management functionality. These tools can help you with risk assessment and portfolio construction, as well as connecting portfolios to clients’ financial planning goals and enabling straight-through processing to custodians.

You can use digital investment tools in the following areas:

  • Paperless onboarding
  • Risk profiling
  • Portfolio construction, design and back-testing
  • Rebalancing and trading
  • Account aggregation
  • Performance reporting
  • Financial planning
  • Compliance reporting

These tools can serve as a unified client interface to help with new client onboarding by connecting directly to custodians, thus facilitating paperwork. They can connect directly to trading and rebalancing tools to help facilitate portfolio construction and design. And they can support ongoing client service needs.

In addition, they can facilitate a wide range of different types of advisor-client communications. These include live chat, calendar integration, email support and automated email campaigns.

Despite the advancements made in digital investment, these tools still have some limitations. For example, they generally lack robust reporting capabilities and integrated portfolio rebalancing. This makes them insufficient to meet the high-end portfolio management and financial planning needs of most advisors. However, these tools can still be a valuable addition when it comes to boosting efficiency and improving the overall client experience.

Replacing Legacy Thinking and Systems

One of the hindrances some financial advisors face when it comes to using digital investment tools is getting past the “we’ve always done it this way” mindset. However, integrated technology tools can actually help you deliver a better client experience and spend more quality time connecting with clients and prospects.

Advanced analytics that accompany digital tools can also make it easier for you to personalize and target your client interactions. Behavioral data, in particular, can be used to truly transform the client experience by providing you with insights that enable you to better personalize your investment recommendations.

How Could Your Firm Benefit?

If you haven’t considered incorporating digital investment tools into your practice, now is the time to think about how you could possibly benefit. This can be a great way to automate many routine and administrative tasks, which can free you up to provide the human touch that sets you apart from the numerous robo-advisor services out there today.


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