Why Your Financial Advising Practice Should Embrace Technology

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Why Your Financial Advising Practice Should Embrace Technology

History is replete with examples of failed businesses who refused to embrace new technologies. Kodak didn’t embrace digital photography; Circuit City neglected the burgeoning online marketplace- those are just two of many recent examples. If you perform a historic study, you will find this repeated over and over. Other businesses, however, thrive and evolve by embracing new technologies. Netflix transformed itself from a DVD rental home delivery service to an online streaming behemoth and content producer, and in the process added more than 55 million subscribers and billions of dollars in valuation. When the iconic magazine National Geographic saw subscription revenues falling in 2009, they restructured to diversify their media platforms: They negotiated a cable programming deal with Fox, redesigned and better integrated their content, and reached new audiences through social media. By 2013, their yearly revenues almost doubled their previous peak in 1999 at a time when other print publications were filing bankruptcy. Starbucks was the first chain of its kind to accept mobile payments, and by 2014 16% of all Starbucks transactions were processed through their app. That number increased to 21% the following year. This shift increased revenue, but more importantly it increased customer loyalty and allowed Starbucks to collect troves of valuable data to better serve their customers, increasing the long-term stability of the company. Your financial advisor firm too, can either ignore new technologies and fail or embrace them and thrive.


Staying Connected

Modern communication tools allow professionals to connect with clients and each other in ways previously unimaginable. Modern communication tools remove hierarchical and physical boundaries that previously prevented open communication. The use of platforms like Twitter and LinkedIn can publicly establish you as an expert in financial advising, ensure you are up to date on the state of the industry, allow you to speak directly to large numbers of clients and potential clients at once, and market to clients who might not have otherwise paid your firm attention (for free!). Other tools, such as screensharing software, video conferencing, cloud sharing, and even simple email and text messaging allow you to connect with clients and associates more freely, quickly, and easily. Instead of scheduling a meeting to review mundane matters, you can simply drop documents in a shared drive and allow clients or associates to review at their leisure. If they have input, they can simply send an email, or if a more thorough conversation is warranted, use screensharing or video conferencing software. These advancements streamline communication for your firm and allow you to spend more time performing the tasks that make you money.


Account Aggregation Software

Another technology that can free up your time and allow you to focus more of your energy on revenue increasing tasks is account aggregation. Account aggregation, or financial data aggregation, is a method of compiling information from various accounts (bank accounts, investment accounts, credit card accounts, etc.) into a single location. Account aggregation simplifies operations, accelerates asset gathering, allows your firm to expand service offerings, improve client service, and give financial advice from the perspective of their entire financial situation. Using account aggregation will streamline your practice, eliminating mundane time-consuming tasks such as collecting paper statements and manually entering data, and increasing the efficiency of your entire operation. Account aggregation is a powerful tool that uses direct connections between computer systems to save your firm time and money, free you and your team to perform higher-dollar tasks, and allow you to better serve your clients.

Your clients are likely already using account aggregation to monitor their personal accounts (Mint.com anyone?) and expect the same convenience when interfacing with your firm. They want one place where they can login and obtain a complete view of their assets and liabilities- especially younger clients. Your clients are better served using robust account aggregation through your firm than a free website, which offers limited functionality, and will make investment offers and advertising pitches to them that may not be in their interests.


Big Data

Big data helped Netflix produce one of the most successful shows of all time, helped President Obama win the 2012 election, and increased economic ties between India and Japan. It can help your business, too. Big data is simply large data sets that can be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions. Clients vary significantly, and so do their goals, so your approach should also vary. Your practice should have a goals-based approach and involve real-time financial planning. Big data can help your firm assess what your clients need and want, and move quickly to address those wants and needs. Using big data in your practice can also help you adjust to emerging trends and even capture new markets.

The result of adapting to emerging technologies is a financial advising practice at the forefront of the industry, better able to serve the needs of its clients, operating more efficiently and profitably. The result of not adapting is falling behind, failing to meet your clients’ needs, and wasting time and money while watching your competitors get ahead. Your choice.

John LucianoComment