If you’re like most Americans, you likely had a Toys“R”Us store within a short driving distance of your home. Now the ubiquitous retail chain is set to follow in the footsteps of many of the places I spent my teen years — Blockbuster, Radio Shack and Tower Records — all artifacts of the past.

The reason: like those defunct retailers before it, Toys“R”Us failed to adapt as technology disrupted its market.

The wealth advisory industry is currently having a similar “Kodak moment.” But, since digital wealth planning services are still in their relative infancies, and with the hindsight of all those dead companies’ missteps, we can avoid a similar fate and instead embrace the opportunity. But that will require decisive action, which not all advisors or firms will take. Rather than treating technology as a threat, the successful financial advisor of the future will leverage technology as a catalyst to add efficiencies to their business, to provide an innovative client experience and ultimately to expand their practice. Efficiency, experience and expansion, or E3, create the path forward for the advisor of the future.

Bionic Man The successful financial advisor of the future will not treat technology as a threat, but harness it to his or her advantage and add efficiency to the business.
Bloomberg News


The numbers alone make a powerful case. For one thing, although estimates hold that some $30 trillion will move from one generation to others over the next 30 years, fewer than one in five adult children work with their parents’ financial advisor. That’s a gap that technology can help bridge.

Incorporating digital technology also makes sense from a strategic standpoint. A 2016 study by the Aite Group shows that firms with a defined value proposition, such as an ongoing focus on leveraging digital tools, enjoy 19% higher profit margins, added 50% more clients over the last two years and have 25% lower turnover than those that lack that strategic emphasis.

If nothing else, digital disruption is undoubtedly coming. Although its current toehold is relatively small, digital wealth and financial planning services are poised to explode. According to a study by Business Insider Intelligence, investment products and services that include elements of automation will manage roughly $1 trillion by 2020 and $4.6 trillion by 2022.

Meanwhile, there’s the more traditional wealth management model, one whose methodology can needlessly burden even the most accomplished advisor. Given such daily distractions as account paperwork, trade processing and other rudimentary tasks, estimates hold that advisors spend more than twice the optimal time on simple chores. That time should instead be earmarked for meeting new clients and conducting other revenue-boosting activities. Firms that free up additional time and resources for business development increase their assets under management more quickly than firms with less time devoted to client acquisition.

Those and other reasons make it imperative that financial advisors adopt and leverage new technology of all sorts, including tools that can effectively augment and support their wealth of experience and insight, effectively transforming human advisors into bionic advisors who are capable of offering more efficient and complete services to a broader range of clients.

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Technology in no way compromises the value of personal relationships.”

This added efficiency can impact an advisory business on a number of levels. One such place is the back office. Employing cloud-based services and products, technology now allows for the automation of a range of tasks, from account creation and management to automatic portfolio rebalancing to automated billing and account services.

So, too, can the client experience be improved by implementing varied robo tools. Here, clients can take advantage of paperless account sign-up as well as web and mobile access to portfolio information, activity and performance.

But technology also stands to improve the activity of financial advisors themselves. For instance, artificial intelligence can analyze trends and help advisors tailor advice to particular clients by identifying connections between investment behaviors. That not only allows advisors to provide their clients with more customized service, but can also broaden the range of clients with whom an advisor can work effectively.

The growing incorporation of technology into investment management and financial planning also disproves many concerns and mistaken assumptions advisors may have about these sorts of tools. One has to do with the size of the target market. Although younger people may have a greater affinity for a hybrid of digital investing tools and human advice, they don’t have a monopoly on that trend by any means. About 41% of households prefer a mix of live professional advice and digital forms of guidance, according to a 2017 survey by the research firm Hearts and Wallets.

Nor is robo advice the sole purview of smaller clients looking for financial guidance on the cheap. New technology works well across a spectrum of clients who appreciate greater efficiency and more targeted service.

Finally, and perhaps more importantly, technology in no way compromises the value of personal relationships. On the contrary, thoughtful use of technology simply lets human advisors do their jobs better, improving their bottom line while bettering the financial lives of a growing spectrum of clients.