TO­MOR­ROW The fu­ture of fi­nan­cial ad­vice in­volves a com­bi­na­tion of tech­nol­ogy and you.

Al­though some ad­vi­sors view the ad­vent of tech­nol­ogy as a threat to their ex­is­tence, oth­ers fore­see col­lab­o­ra­tion be­tween the power of tech­nol­ogy and the pro­fes­sional judg­ment of a hu­man ad­vi­sor

Investment Executive - - FRONT PAGE - GEORGE HARTMAN

“Coach’s Fo­rum” is a place in which you can ask your ques­tions, tell your sto­ries or give your opin­ions on any as­pect of prac­tice man­age­ment. For this in­stal­ment, George dis­cusses the wave of tech­no­log­i­cal change that is trans­form­ing the fi­nan­cial ad­vi­sory busi­ness and of­fers his ad­vice on how to adapt to that change. George wel­comes ques­tions and com­ments you have about run­ning your prac­tice.

opin­ions re­gard­ing the im­pact of tech­nol­ogy on the role of fi­nan­cial ad­vi­sors range from dire pre­dic­tions of the death of the tra­di­tional ad­vi­sor to an un­wa­ver­ing in­sis­tence that “soft­ware will never be able to do what I do for my clients.”

For­tu­nately, the ma­jor­ity of ob­servers, my­self in­cluded, fore­see the fu­ture as more of a col­lab­o­ra­tion be­tween the power of tech­nol­ogy and the in­sight and pro­fes­sional judg­ment of the ad­vi­sor.

To frame the de­bate, let’s con­sider it in the con­text of the four-step evo­lu­tion of the client/ad­vi­sor re­la­tion­ship: at­trac­tion, en­gage­ment, con­ver­sion and ad­vo­cacy.

There in­evitably will be an over­lap of the ca­pa­bil­i­ties of tech­nol­ogy and the in­flu­ence of an ad­vi­sor at each stage. At times, one will play the lead role while the other acts in sup­port.

As a creative twist, be­cause the awards sea­son for movies and TV is upon us, let’s use an awards theme to ex­am­ine each phase of the client/ad­vi­sor re­la­tion­ship:

1. at­trac­tion

Plot: Ad­vi­sor ig­nores dig­i­tal mar­ket­ing and risks be­com­ing “The Un­known.”

Nom­i­na­tions: Best Ac­tor: Tech­nol­ogy; Best Di­rec­tor: Ad­vi­sor.

In the old days, we sim­ply called this stage “mar­ket­ing” and de­scribed it as de­ter­min­ing what your tar­get mar­ket wants and con­vinc­ing prospec­tive clients that you can pro­vide it through a se­ries of ac­tiv­i­ties de­signed to cap­ture their at­ten­tion.

Largely, that still is true. How­ever, the tra­di­tional method­ol­ogy of ad­ver­tis­ing, di­rect mail, sem­i­nars, face-to-face net­work­ing, ask­ing for re­fer­rals and other con­ven­tional “out­bound” pro­mo­tional ac­tiv­i­ties have given way to dig­i­tal mar­ket­ing de­signed to cre­ate “in­bound” op­por­tu­ni­ties. Now, prospec­tive clients seek you out rather than you seek­ing them.

Many ad­vi­sors who mar­ket suc­cess­fully to­day have found that so­cial me­dia is the mod­ern ver­sion of net­work­ing. Web­sites have be­come these ad­vi­sors’ ca­pa­bil­i­ties brochure, and their blogs, pod­casts and we­bi­nars have re­placed sem­i­nars. E-books il­lu­mi­nate these ad­vi­sors’ value propo­si­tion and they get more re­fer­rals from Google than from ex­ist­ing clients.

Clearly, al­though you, in this con­text, have an im­por­tant role in de­ter­min­ing your mes­sage, the mes­sen­ger — that is, tech­nol­ogy — is what gets that mes­sage out to a tar­geted au­di­ence in a com­pelling way. And this strat­egy en­cour­ages those au­di­ence mem­bers to seek more in­for­ma­tion about you, thereby in­creas­ing the chance of en­gage­ment. Fi­nal Scene: Ad­vi­sor out­sources dig­i­tal mar­ket­ing to a pro­fes­sional firm and draws in­creas­ing num­bers of qual­i­fied vis­i­tors to his or her web­site.

2. en­gage­ment

Plot: Ad­vi­sor at­tracts qual­i­fied prospects, then loses them to the com­pe­ti­tion. Nom­i­na­tions: Best Ac­tor: Tech­nol­ogy; Best Di­rec­tor: Ad­vi­sor.

“En­gage­ment” is a more de­fin­i­tive and ac­cu­rate term for “sales fun­nel” or “pipe­line man­age­ment.” En­gage­ment de­scribes the broader in­tent of this stage of client devel­op­ment, which is to have a dis­ci­plined pro­gres­sion for deep­en­ing re­la­tion­ships by in­creas­ingly demon­strat­ing your value in or­der to build trust and con­fi­dence.

Your web­site is the heart of your en­gage­ment ef­forts. It’s where you house your in­tel­lec­tual con­tent, your of­fers and your calls to ac­tion. Your other pro­mo­tional ac­tiv­i­ties — such as blogs, tweets, posts and your LinkedIn and Face­book pro­files — should all be de­signed to lead prospec­tive clients back to your web­site.

Once there, your prospects should find a se­ries of of­fers that se­quen­tially build trust. First is a no-risk, no-con­tact-info-re­quired

Y our web­site is the heart of your en­gage­ment ef­forts

en­cour­age­ment. For ex­am­ple, “Free down­load: 10 Tax-Sav­ing Tips Many Small-Busi­ness Own­ers Ig­nore.”

Next, a low-risk (email ad­dress re­quired) in­vi­ta­tion to “Sign up for our news­let­ter, For Busi­ness Own­ers Only.” That might be fol­lowed by “Click here for our e-book, Anatomy of a Suc­cess­ful Busi­ness Suc­ces­sion Plan.” And, fi­nally, “Reg­is­ter for our up­com­ing we­bi­nar, Suc­ceed­ing at Suc­ces­sion.” Each of­fer brings the prospec­tive client closer.

Again, al­though the con­tent of these of­fers should orig­i­nate with you, the ad­min­is­tra­tion of the en­gage­ment process, the breadth of its reach and its abil­ity to con­vert in­ter­est into ac­tion gives tech­nol­ogy the lead­ing role. Fi­nal Scene: Prospec­tive clients ea­gerly await the next steps in re­la­tion­ship-build­ing.

3. con­ver­sion

Plot: Tech­nol­ogy over­takes the ad­vi­sor’s tra­di­tional value propo­si­tion. Nom­i­na­tions: Best Ac­tor: Tech­nol­ogy; Best Sup­port­ing Ac­tor: Ad­vi­sor.

The “con­ver­sion” stage of the client/ ad­vi­sor re­la­tion­ship-devel­op­ment process is most closely aligned with “sell­ing.” The chal­lenge is that the process of con­vert­ing a prospec­tive client into a real client tra­di­tion­ally has been built on you demon­strat­ing your ex­per­tise and ad­vice process — in other words, your value propo­si­tion.

Amid the tech­nol­ogy rev­o­lu­tion to­day, how­ever, the tra­di­tional value propo­si­tion of be­ing a good fi­nan­cial plan­ner, port­fo­lio de­signer, picker of stocks or fund port­fo­lio man­ager or es­tate plan­ner is be­ing usurped steadily by tech­nol­ogy that pro­vides sim­i­lar or bet­ter re­sults faster, more ac­cu­rately and less ex­pen­sively.

The choice fac­ing you is ei­ther to fight the in­cur­sion of tech­nol­ogy into your value propo­si­tion or to lever­age it in a col­lab­o­ra­tive ef­fort to meet the needs of your clients bet­ter. Among the cat­e­gories in which tech­nol­ogy now can per­form very ef­fec­tively and ef­fi­ciently are fi­nan­cial and es­tate plan­ning, in­vest­ment pol­icy state­ment gen­er­a­tion, port­fo­lio de­sign, port­fo­lio mon­i­tor­ing and re­bal­anc­ing, and client ac­count re­port­ing.

As tech­nol­ogy evolves, you will be able to add ag­gre­ga­tion of client fi­nan­cial in­for­ma­tion across in­sti­tu­tions (cur­rently avail­able in the U.S.), au­to­mated “on­board­ing,” client self-ser­vices, ar­ti­fi­cial in­tel­li­gence-based needs anal­y­sis and process im­prove­ment. Fi­nal Scene: Ad­vi­sor wel­comes tech­nol­ogy to his or her prac­tice, en­abling the busi­ness to pros­per to un­ex­pected heights.

4. ad­vo­cacy

Plot: Ad­vi­sor puts long-term client loy­alty at risk by fear­ing tech­nol­ogy. Nom­i­na­tions: Best Ac­tor: Ad­vi­sor; Best Di­rec­tor: Ad­vi­sor; Best Sup­port­ing Ac­tor: Tech­nol­ogy.

We know that ob­tain­ing a new client costs much more than re­tain­ing an ex­ist­ing one, which should lead you to ask: “How can I en­sure the re­ten­tion of clients?”

His­tor­i­cally, ad­vi­sors looked to pro­vide a high level of client ser­vice as the key to loy­alty, which they de­liv­ered through pe­ri­od­i­cal re­views, oc­ca­sional on-de­mand ac­tiv­i­ties and pub­lic re­la­tions. In to­day’s world, with much of those tra­di­tional ser­vices — in­clud­ing in­for­ma­tion up­dates, fi­nan­cial plan re­view, port­fo­lio re­bal­anc­ing and client re­port­ing — hav­ing been as­sumed by tech­nol­ogy, the stan­dard of what con­sti­tutes good ser­vice has been raised sig­nif­i­cantly.

In that con­text, the star­ring role for you will be much more than “sub­ject mat­ter ex­pert” or “process en­gi­neer.” The hero of the story will be you — if you man­age the client ex­pe­ri­ence through ev­ery stage of the re­la­tion­ship. If you can do that, you will play the parts of tourist guide, coach, con­fi­dante, coun­sel­lor, con­soler and cheer­leader.

This stage con­sol­i­dates the pre­vi­ous ones. In the at­trac­tion phase, for ex­am­ple, your role is to guide your mes­sag­ing so that it speaks to your de­sired mar­ket and makes rel­e­vant con­tent eas­ily ac­ces­si­ble to those who seek it. Through­out the en­gage­ment phase, your role is to al­lay fear and con­fu­sion through a pro­gres­sive demon­stra­tion of ex­per­tise and ex­pe­ri­ence. The con­ver­sion phase will find you sit­ting on the same side of the table as your clients, us­ing the tools of tech­nol­ogy to­gether to an­a­lyze, in­ves­ti­gate, val­i­date and im­ple­ment cus­tom-crafted so­lu­tions to your clients’ re­quire­ments — both per­sonal and fi­nan­cial.

Ad­vo­cacy rec­og­nizes that tech­nol­ogy will help you de­liver su­pe­rior re­sults in your tra­di­tional role, at the same time as you be­come more deeply and pas­sion­ately en­gaged with your clients. Fi­nal Scene: Ad­vi­sor ben­e­fits from the value of life­time client re­la­tion­ships.

George Hartman is CEO of Mar­ket Log­ics Inc. in Toronto. Send ques­tions and com­ments re­gard­ing this col­umn to george@mar­ket­log­ics.ca. G eorge’s prac­tice-man­age­ment videos can be viewed on www.in­vest­mentex­ec­u­tive.com.

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