Driving advisor retention with your digital experience

The Advisor360° Amplify program brings industry leaders together to share their expertise with the wealth management community. In this blog, Dr. David Townsend of Halo Investing discusses how the digital experience of a firm’s tech stack increases advisor retention.

The demand for financial advisors is on the rise. With the average age of a wealth manager nearing 60 and as more assets move to the next generation of clients, a fresh wave of talent is needed. And younger advisors don’t want to do business in the way that has always been done. The key to retaining top talent today is improving the digital experience they encounter in the day-to-day. Keeping up with the latest technology is imperative to ensuring wealth management firms big and small hold on to winning teams.

The need to invest in the right technology

In the inaugural 2022 Connected Wealth Report by Advisor360°, the data show that 65% of advisors have lost business from clients and prospects because of outdated technology. Stale platforms that do not keep up with emerging financial planning issues of investors ranging from Gen Z to the Silent Generation, and all the complex situations that lie in between, simply cause headaches with advisors. Eventually, if a firm does not continuously invest in the most state-of-the-art financial planning programs, smart advisors will simply move on to join companies that do it right.

Survey says: Social media matters

What’s more, integrating social media into your practice is pivotal these days. Put simply, your LinkedIn, Twitter, and Insta games must be on point. Does that intimidate you? Have you never even used something like Snapchat or TikTok before? Many old-school advisors haven’t, and that’s fine. But ensuring that your advisory business reaches millennials and Gen Z is critical so that there’s continuity as the great asset shift from baby boomers to their kids and grandchildren accelerates in the years and decades ahead.

If you are still uneasy about strengthening your social media presence, consider that Advisor360°’s survey revealed that 82% of financial advisors said that integrating platforms like LinkedIn and Twitter into client-facing tools is a must-have. Hiring and retaining advisors, many of whom may be under 40 years old, who are not only slick with social but who downright enjoy integrating it into their marketing toolbox can strengthen your team.

Beyond social: Meeting next-gen needs

Speaking of the next generation of clients, 73% of advisors believe that millennials and Gen Z require a different type of engagement compared with boomers and even Gen X. Once again, seeing this as an opportunity rather than a threat is the correct framing. A strong staff of wealth managers includes building diversity around which advisors serve a particular client base, and then learning from each other so that one member’s weakness can be turned into a strength over time. It’s clear that a client-focused business with cutting-edge tech is required. Additionally, new investment solutions that address the needs (and even fears) of investors in their 20s, 30s, and 40s can help greatly.

Amid ongoing volatility in the stock and bond markets, and with financial shoes dropping left and right whenever the next mini crisis unfolds, it is not only boomers who are concerned about protecting what they have earned. Consider that clients in their 30s may already have a sizable portfolio with strong salaries. Many of them have growing families and are looking to tackle important financial goals like wiping away the rest of their student debt, saving for a down payment on a home, or even upgrading to a bigger place.

All the while, these individuals and couples will probably find themselves caring for their aging parents before long. That’s a complex financial situation fraught with possible pitfalls, and it takes quality advisors to construct, execute, and manage a financial plan. This goes beyond simply sending a snappy tweet or crafting a compelling LinkedIn post. This is real life. Your business cannot afford to lose quality advisors simply because of an outdated digital experience, but that happens all too often. It damages your business and is frustrating (to put it mildly) for the client.

FinTech brings costs down, delivers customizable solutions

Technology has also brought about new investment vehicles to help clients at any stage of their financial journey better reach their goals. Tech brings costs down and opens doors to investments once reserved for a select few wealthy clients. For instance, annuities once featured heavy commissions and opaque embedded costs that were sold to clients, not bought by them. While there’s still some of that going on, the industry is evolving, and advisors willing to embrace the latest FinTech innovations can now access low-cost and fee-transparent annuities that can help clients young and old manage risk.

It used to be that only families with net worths in the tens of millions had access to quality structured notes tailored to their unique needs. Today, however, technology and competition have brought down costs and bank issuers battle each other on price to offer clients with portfolios of both large and modest size straightforward, high-credit-quality notes. The tech-savvy advisor can identify a note that fits her client’s situation and easily purchase and integrate it into a portfolio with little time and headache. These defined-outcome protective investment strategies are used by many wealth managers today to build strong financial plans that can weather volatility better than a simple balanced stock/bond allocation.

Advantage: RIA

Perhaps the biggest challenge is for smaller RIA shops to compete with large broker-dealers and wirehouses for top talent. After all, if your practice consists of just a few advisors rather than many thousands, your FinTech budget is strapped. Costs matter and ensuring that your advisory team is happy and motivated is paramount, too. But this is another spot where you can have an edge over the competition. Listen to what your advisors want, then construct or tweak your tech stack around the feedback and recommendations.

A Certified Financial Planner (CFP®) who joins a big broker-dealer will just conform to its products and tech suite and will have little say in what digital investments are made. While large asset managers may dominate the digital experience today, independent advisors willing to collaborate with their team to craft client-focused wealth management platforms can buck the trend and thrive.

Quick win: A better website

You may be wondering what you can do today to beef up the digital experience of clients to make life easier for your advisors. The top priority may be to spice up your website. That’s where prospective clients are likely to learn about your value proposition first. Increasing investment dollars to ensure your website is optimized based on what we now know works best to bring in clients can be a relatively quick win.

It also saves your team time by not having to answer basic questions that can be addressed online. Moreover, an RIA has a leg up on the big guys since you can make a website your own. For instance, if your firm caters to a certain client niche, online pages can appeal just to that audience. Gone are the boring and cliché sailboats, lighthouses, and compasses. You do you, and your clients and advisors will value that.

The bottom line

A strong digital experience drives advisor retention. The inaugural 2022 Connected Wealth Report by Advisor360° proves that today’s advisors are losing business due to inadequate wealth management solutions—most of which center around tech. A subpar tech stack costs RIAs real dollars and real clients, and the next generation of advisors recognizes that. The key to retaining quality wealth managers is collaboration so that their views are heard and to equip them with the right tools so they can improve your clients’ financial lives.

Dr. David Townsend DBA, CFA, leads product marketing and thought leadership at Halo Investing. He’s responsible for helping advisors develop and articulate how portfolios can benefit from defined-outcomes and other alternative strategies.