Why your financial adviser should be tech-savvy enough to serve you well


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Welcome to the future. If your financial adviser isn’t a cyborg, he or she may soon be.

While your adviser won’t have any robotic body parts, the best financial advisers in the very near future will offer the convenience and connectivity of robo-advisers with the traditional warm and fuzzy feelings of a human relationship. Want the traditional monthly or quarterly statement in the mail and a yearly check-up with the adviser? No problem! But if you want online bells and whistles and a fully virtual relationship, that’s fine, too.

What do the best financial advisers offer?

Robo-advisers or automated investment advisory services have given the financial services industry fits. But robos aren’t exactly devouring financial advisers’ lunches. The fastest growing segment of the financial advice industry is “bionic advisers or technology-augmented advice,” says Michael Kitces, a partner and the director of research for Pinnacle Advisory Group, and publisher of the financial planning industry blog Nerd’s Eye View.

“These are personal advisory firms using technology to leverage client relationships,” he says.

For instance, 1080 Financial Group in Los Angeles is implementing some of the convenient features of a robo-adviser, such as online account opening and asset allocation, but pairs them with advice from a human financial adviser.

“Essentially you’ll be able to open an account within minutes directly from our website. It will align your risk comfort with a low-cost asset allocation portfolio we manage in-house, but you can choose a different portfolio if you wish,” says Stephen Rischall, co-founder of 1080 Financial Group.

Plus every client has direct access to a dedicated fiduciary financial adviser. “When they have a question, it’s answered by their adviser, the same person every time,” he says. (Fiduciaries pledge to represent the best interests of their clients.)

It does cost more than fully automated advisers. At 1080 Financial Group, clients are charged 1% of assets under management. As a comparison, the automated firm Wealthfront charges an annualized rate of 0.25%, sans adviser.

What do people want?

Industry research has shown that as convenient as a fully automated investing experience may be, people want a human in the mix. Even the digital natives — millennials — would like a person to talk to when they need one.

Capital One Investing asked young folks what they would like in their investing experience and while they do value automation, “60% said they would like to use a financial adviser in the future,” says Yvette Butler, president of Capital One Investing.

“Millennials value the relationship as much as Gen X and more than boomers,” she says.

Technology allows a faster response

When the market heads south, everyone wants to talk to their financial adviser. Technology can help advisers make all of their clients feel like they’re worth a million or more investable bucks.

Software platforms allow advisers to automatically send out correspondence to clients, reassuring them that their money is in good hands, and saying they’ll check in with them soon for a meeting when a certain triggering event occurs, such as a 5% drop in the S&P 500.

Financial advisers turning to technology

One platform, eMoney, which was recently purchased by Fidelity Investments, lets advisers group clients in categories for targeted notes. Or they can set up thresholds that would trigger an alert to themselves and a note to the client.

A newer platform called CircleBlack has the features of eMoney, but also includes a smartphone app for clients.

CircleBlack also sends out targeted information to clients. “If I have investments with exposure to China, it’s helpful to send information about China, but don’t send information on Greece. The technology is good for a number of tasks, including sorting out which clients should get what,” says the CEO of CircleBlack, John Michel.

That means that investors can receive helpful links and thoughtful articles curated to their investment tastes with little effort on the part of advisers. Also, the platforms can help advisers aggregate client accounts to see all of their financial information from one dashboard — even 401(k) information — making life easier for everyone.

To text or not to text?

As an un-trackable and unrecorded means of communication, texting clients makes many advisers nervous and may actually be forbidden by their firm or broker dealer.

“Any type of electronic communication has to be able to be tracked and monitored by compliance,” says William J. Urbanik, managing partner and financial planner at The Second Half Coach in Latrobe, Pennsylvania.

Rose Swanger, a CFP professional in Knoxville, Tennessee, agrees.

“Texting is not one of the sanctioned forms of communications for broker dealers. Unless it’s simple, like a text from a client saying, ‘Hey I’m stuck in traffic or I’m on my way,’ and I can text back, ‘I’m still here, don’t worry,'” she says.

The proliferation of phones and various types of messaging services means monitoring text communications will remain a headache for the financial services industry for now.

The best financial advisers meet people where they are

The best scenario would be one where the adviser has all the tools in place to communicate and interact in the way the client would like.

While technology may be alienating in some cases, it can help advisers meet their clients where they are — literally. Most advisers reached for this story embrace video conferencing and some use platforms that allow screen sharing, so it’s not very different from an in-person meeting — except it skips traffic, weather and scheduling issues.

All the connectivity does have at least one drawback: “Even if you’re out of town they expect to hear back from you. You can’t unplug anymore,” says CFP professional Tom Balcom, founder of 1650 Wealth Management in Fort Lauderdale, Florida.