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Financial Advisor of the Future: High Tech and High Touch

Future of Financial Advisory

What happens when baby boomers’ kids who want nothing to do with their parents’ financial advisor inherit their wealth? Will consumers pay advisory fees when they can quickly build a personalized investment portfolio online for a fraction of the cost? Where is the future of Financial Advisory headed? These are just some of the worries that are plaguing the financial advisory industry.

Automation has always been seen as a threat to the job security of advisors, but that may not be the case. The demand for personal financial advice grows and will continue to grow stronger as income levels and savings rates rise. The demand for financial assets is also increasing at the same time.

With recent news of the US personal savings rate hitting its highest level in 39 years, the wealth management industry is poised for skyrocket growth.

Financial Advisor’s Ally 

According to a survey conducted by Capgemini, financial advisors spend 67% of their time engaging with clients. At the same time, 29% of their time is used to perform administrative tasks. They are leaving only 4% to perform productive tasks such as monitoring and rebalancing client’s portfolios.

Source: Capgemini, 2010

However, all these mundane and repetitive tasks can go away with the help of a Robo-advisor. Automation can help wealth management firms:

  1. Increase the advisor’s productivity
  2. Improve operational efficiency
  3. Improve advisor-client relationship
  4. Increase market share and improve reach
  5. Assist in the delivery of complex and straightforward financial services

A shift in Consumer’s Expectations 

Financial advisors are relieved of the repetitive mundane tasks, so they can focus more on enhancing client experiences. Research by Salesforce found that 84% of respondents expect very highly of customer experience, to the extent that it holds the same importance as the products or services.

Just as technology has evolved, the client’s expectations have done so as well. It is no longer enough to deliver an extraordinary product; a customer’s experience is as necessary. Therefore, automation integration in financial services will enable financial advisors to provide the most satisfactory customer experience while retaining high productivity.

Digital Consumers

Even though technological advancements have been going on for years, companies are still having trouble keeping up with the digital change – including wealth management firms. Unfortunately for the firms, these changes are inevitable and will not stop, especially with digital consumers as the driving force behind it all.

In 2019, Ernst & Young surveyed 2,000 investors across 26 countries on various topics surrounding the wealth management scene.

Source: Ernst & Young 2019 Global Wealth Management Report

So what does this tell us about consumers’ behavior? First of all, consumer’s behavior is evolving, and it’s growing fast.

In 2016, 18% of clients used mobile applications as their primary channel, with a projected 6% increase by 2018. And once again, as consumers, we underestimated the rate of change. The actual percentage of clients who use mobile applications doubled from the amount in 2016. Coupled with those who prefer website access, ⅔ of clients prefer digital platforms as their primary channel.

Smartphones have only become smarter. Everything can be done at the touch of a button, from grocery shopping to finding jobs. 

Convenience and efficiency are the main drivers behind increasing preference from clients.

As clients drift towards mobile, first-generation channels such as websites are becoming obsolete. Projected to stay constant at 38%, the actual numbers would beg to differ. In less than three years, the preference for websites as a primary channel dropped by a third.

These numbers are the average across all wealth management activities. Hence, will the number differ when we dive into specific activities?

The answer is no.

Source: Ernst & Young 2019 Global Wealth Management Report

The gap is even wider. Although a large portion of the clients uses mobile applications for basic tasks, there has been increasing popularity in using apps for advanced activities such as portfolio management and advice-related tasks.

These percentages are expected to increase over the coming years with advancements in wealth management tech and ease of use for clients of all ages.

Another compelling observation found that in correlation with the complexity of tasks, the client’s preference for digital assistants or chatbots increases.

A survey conducted in 2018 found that only 1.4% of respondents are currently using digital assistants. However, it is projected to increase eight times the amount in the future. The demand for digital assistants is not restricted to only simple tasks. Clients are more inclined to use digital assistants for complex tasks such as advice-related activities.

High Touch Engagement

Nonetheless, the need for traditional advisors is still prevalent. High touch engagement is even more critical during a volatile time and major life milestones. Looking at the results from the survey below, we can see that for all major life stages, more than half of the clients are looking to use advisory services.

Why is this so?

As human beings, we fear uncertainty, and significant life changes are full of it. When faced with such changes, clients search for trustworthy advisors to help them navigate through the murky waters of life. However, the demand for human interaction can vary depending on the types of clients. Clients with more complex financial strategies or situations request more human interaction.

To many people’s surprise, the demand for face-to-face meetings decreases with wealth. The rate of mass affluent demand for such services is nearly double the rate of the ultra-high net worth clients- 11.7% and 6.5% respectively. This counters the general perception that automated services are for the mass affluent.

Source: Ernst & Young 2019 Global Wealth Management Report

What’s Next?

Integrating automation does not mean eliminating human advisors. Yes, consumers are shifting more towards digital as a primary channel. However, some clients require the help of a traditional financial advisor.

It is said that the absence of emotions is one of Robo-advisors biggest strengths. But in times of uncertainty, clients need someone who can empathize with them and reassure them by providing that human touch.

So what does this mean for firms? Do they move to digital or remain the same? Well, both. It is all about balancing high tech and high touch services. Through harnessing state of the art technology, firms can improve productivity and automate repetitive tasks. As a result, advisors can focus on delivering high-quality engagement to clients who desire the human touch.

According to a Deloitte survey, 66% of consumers seek a self-directed journey. Providing omnichannel delivery will enable consumers to lead their travel and choose how to interact with wealth management firms. Those who prefer little to no human interaction can opt for the entire digital experience. Whereas clients who seek to consult a financial advisor still can do so, providing the best of both world experiences for modern clients.

This is truly the financial advisor of the future.

Be a financial advisor of the future with Bambu.

Bambu can help you, and your company prepare for the future. Our products have an easy-to-use and well-designed interface, helping to facilitate the smooth journey that you seek to deliver to your clients. Our features are powered by proprietary algorithms, allowing us to automate things like portfolio rebalancing, pull financial insights, visualize data, and value adds to financial advisors in many ways.

Find out more about Intelligent Advisor, built to help investment advisors here.












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