It is 2018, and many financial advisors are performing all of their advisor duties electronically, including communicating with clients.
To cut costs, many independent advisors and advisors working for forward-thinking providers are foregoing the brick-and-mortar office concept and doing all of their work via telephone, texting, email, or video-chatting. For an investorworking with such an advisor, a one-on-one or face-to-face meeting, which many investors still want with their advisor, will take place via Skype or FaceTime. Voice communication still takes place via telephone, but that telephone is almost certainly a cell phone. Face-to-face meetings are going to be conducted by video-chat. No more office visits for an investor, since the advisor does not have one. An office, that is.
Such maneuvers bring the advisory service industry into the 21st century, and reduces costs to the advisor or the provider due to the cost of rent for an office or suite in the company’s office. But are investors ready for that radical change in their service provider?
“The reasons for advisors going without a home office are plenty these days,’’ said Spectrem president George H. Walper Jr. “Thanks to mobile technology, work can be conducted anywhere at any time for most advisory services. But investors have to buy in, and that is where the new format for delivering service must be introduced to investors as the best way to get things done today.
Certainly, more advisory tasks are completed today electronically than 10 years ago, including communication. While phone calls in which people actually talk to each other are going the way of the dodo bird, phones are often used for texting information, and they can also be used for video-conferencing. For investors who don’t like to receive or send texts, email is the communication method of choice; emailing is also impersonal, delivered electronically, and can be performed on a smartphone with no need for a home office with a desktop computer.
But a large number of investors still have not bought into the new technology as it relates to their investment strategies. Advisors who want to conduct business on their smartphone need to tell their clients to get smart (phone).
According to Spectrem’s upcoming study Communicating with Providers and Advisors, only 27 percent of all investors with a net worth over $100,000 have ever communicated with their advisor via text. Surprisingly, that percentage is consistent over all age groups.
However, that means 73 percent have not yet attempted to communicate with their advisor via text. While there remain some regularity wording which prevents certain forms of information to be disseminated via text, those regulations are being relaxed in response to the propensity of all people to use smartphones for texting purposes these days.
And there is an open reluctance from investors to become savvy in the ways of texting and investing. Asked to rate their willingness to text with their advisor, investors placed their interest at 32.02 on a 100-point scale. That is obviously below a two-thirds rating, and no segment of investors placed their interest above 45.00 (Millennials rated their interest at 43.40, which is still not overly favorable).
The interest in video-chatting is even lower, with an overall rating of 22.85. This is bad news for advisors who want to meet with their investors via video-chat rather than have face-to-face meetings with their clients, which would require some sort of office setting.
Interest in video-chatting with advisors was rated by Senior Corporate Executives at 24.29, slightly higher than the average, and at 35.47 by Millennials, which is still not a ringing endorsement.
The Spectrem study shows that only 6 percent of all investors have already experienced the electronic form of face-to-face meetings with their advisor.
Top Takeaways for Advisors
No one is going to turn back the clock on the advancements of technology for financial advisors, and the outbreak of advisors working without a home office for the purpose of client meetings is expanding. But advisors who want to be 100 percent mobile need to be able to address new clients who are uncomfortable with that format. Some may not want to do it at all, although such reluctance is probably most likely among older investors for whom technology remains a beautiful mystery.
©2018 Spectrem Group