'These numbers should be eye-opening to all in advisory business'

It’s an issue that has come under the spotlight during the COVID-19 shutdown and advisors, on the whole, are not happy with the wealth technology tools on offer.

A new survey from Broadridge Financial Solutions has produced some eye-opening results. Firstly, that 51% of North American advisors would leave their current wealth firm in search of better technology, while 77% reported losing business during the pandemic because of inadequate tech. Those who lost business said that amounted on average to 21.7% of their book.

Michael Alexander, President of Wealth Management at Broadridge Financial Solutions, told WP: “Clients want personalized service and digitization tools that allow you to deepen and broaden the relationship with clients. Not doing that becomes an impetus for clients to leave and if they get a service at one firm that's better than another, they're going to quickly migrate to that.

“These numbers should be eye-opening to everybody in management and in the advisory business. It's clear that firms have to increase the level of investment. The challenge for them is, at a time when firms are under great regulatory and cost pressure, they need to modernize and invest in digital tools to retain and attract clients and advisors. That bodes well for firms like Broadridge, who mutualize cost, investments and innovation in terms of recognizing that [investment firms] can't go it alone and need partners to help them.”

With investment firms now re-assessing technology spend in terms of how to really support the client in the 'new normal', it’s a potential inflection point for the industry. A wave of investment in technology seems likely in order for firms to keep up with client expectation. The dangers of failing to do so including missing out on the biggest generational transfer of wealth in history.

Alexander said: “There's more than $30 trillion in assets that are going to transfer to the next generation. That group is very tech savvy and they expect a digital service because they get it in every part of their life. Forty-four per cent of that group have not been contacted or have a relationship with their existing family’s advisor, and 70% of millennial and Gen Z do not have advisors.

“Not having these digital tools to be able to reach out and connect really puts advisors and firms at risk that the assets are going to go to a firm that pays attention to them in a personal way, and makes it a very easy and intuitive experience.”

This sentiment was backed up by the fact 87% of advisor reported sustained changes in investor communication and engagement. Amid the pandemic, 63% also said they generally communicated with clients on at least a weekly basis. However, this area uncovered a generational difference, with more than half (51%) of millennial financial advisors communicating with their clients daily, while 62% of baby boomer financial advisors communicated with clients monthly or less. Across generations, 74% of advisors wished their firm had access to better technology tools, and 82% stated that paperwork detracts from time spent working with clients.

Worryingly for Canadian advisors, the survey also revealed a gap between United States and Canada when it comes to marketing support. In the U.S., 95% of financial advisors reported that they had enough support from their firms to grow their practice, while only 59% of Canadian financial advisors said the same. Fifteen per cent of Canadian advisors said they get no marketing support from their firms whatsoever.

Meanwhile, advisors in the States are more likely to report that they are provided tools for email marketing (69%), paid digital media promotion (61%) and website creation (60%), compared to financial advisors in Canada, who reported 53%, 26% and 41%, respectively. Only 17% of Canadian financial advisors are very satisfied with the tools they are provided with to interact with clients and prospects over social media, compared to 67% of U.S. advisors, while 8% of Canadian financial advisors do not use social media at all.

Donna Bristow, Managing Director at Broadridge Financial Solutions, told WP: “It's a different approach that firms in America take versus the Canadian firms. Also, in Canada, we need to look at whether they're IIROC advisors or MFDA advisors and the type of capabilities they're providing to both types in the Canadian market.

“The banks own a lot of the large IIROC broker dealers, and they also facilitate a lot of the MFDA professionals through their branches. It's just a different total market type strategy, but [the results] are actually very surprising to me.”

Alexander said it’s clear that the breadth and quality of technology is key to client and advisor retention and deepening relationship, something that has been accelerated by COVID-19. It enables the advisor to personalize the engagement and make life simpler for the client. Choice and preference also play a role in personalized digital communications and good technology allows you to do that easily.

He added: “What this survey shows is the readiness of advisors to embrace this. They recognize they have to pivot and technology is the key to providing high-touch and high-tech service in a personal way. 

“Everybody's going to have to go this way. What’s clear from the pandemic is these are no longer luxury capabilities, these are core capabilities that investors, advisors and firms expect the industry to deliver.”