The future of financial advice is tech and touch

Investment planning needs to be multi-dimensional, incorporating financial advisors and technology.
A tech-and-touch approach to financial planning will enhance the role of independent advisors, the author writes. Picture: Shutterstock

There is a lot of conversation around investing digitally, right now. Supporters of the idea suggest that investors should cut out their brokers or financial advisors and take their money online by investing through digital platforms. The argument goes that while an advisor might give your investments a bit of an edge in terms of growth, the fees they charge tend to negate the value that they add.

The bigger picture

But here’s the thing. The value that financial advisors add isn’t only about choosing a winning portfolio of shares or unit trusts. It’s about looking at every aspect of your financial services requirements and working out what’s best for you as an individual, including your retirement, life insurance, investment and estate planning needs.

A financial advisor will see the big picture, taking into account all the personal variables in your specific set of circumstances – such as your age, income, marital status, existing assets and investments – and advise you accordingly. For this reason, I don’t believe the question should be, “Should I take my investments into the digital space and cut out my advisor?” but rather, “Should I be requesting higher levels of technological interaction from my advisor to support the services he offers me?”

Unfortunately, this level of integration has not taken off in any big way yet. Financial advisors have a tendency to maintain their one-on-one relationships with their clients through traditional methods – like telephone calls and email – rather than making use of technological platforms. And because this is the way things have always been done in this space, it doesn’t occur to their clients that they could demand better service.

Another complicating factor is the fact that most people have financial products from multiple providers. This makes it difficult for their financial advisors to provide up-to-date information about all of the products in one online location.

Technological innovation

Imagine if, when you needed to check your bank balance, you had to send an email to your banker, wait a day because he was seeing other clients, and then receive an email back from him with the information you requested. This is a level of service we would never accept from our banks. We can check a balance, make a transfer or pay a beneficiary at any time of the day or night from anywhere in the world, and so of course, we expect that.

The technology that has worked so well for banking is now also available to other types of financial services. And yet, we continue to be stuck in financial advisor and call centre relationships, during office hours, and depending on when someone is available to help us.

Even though there has not yet been much uptake of this kind of technology, financial advisors have access to online platforms that show their clients how their investments are performing, whenever and wherever they’d care to look at them. But these tools can do so much more than that.

It’s possible to use technology to create a dashboard that shows not only investments, but also retirement planning, or the state of their insurance cover and even whether or not they have an up-to-date will in place. These dashboards can take into account an individual’s whole financial picture, from multiple providers, and not just provide a snapshot of the growth of an investment portfolio.

While these dashboards can be fantastic at showing the whole picture, they do not take away from the value of a financial advisor who knows the investor.

A financial advisor will still be the best person to suggest revisiting life, dread disease and disability cover every couple of years to make sure it’s in keeping with what the insured person earns. Or perhaps upping the various types of cover after the birth of another child. Or recommending changes to retirement and investment structures in line with changing legislation – and explaining those so that their client can understand.

The tech-and-touch model

Since both financial advisors and technology have such an important role to play in supporting individuals in making the right financial decisions, and in the convenience of access to information about their spread of financial products, I recommend a “touch-and-tech” model of engagement.

This means that a client has a relationship with a financial advisor who understands them, their family, and their needs, but that the advisor has a technological platform in place that allows the customer to see the bigger picture of their financial, investment, insurance and estate planning situation.

This platform can offer recommendations if there are areas that are lacking and can even facilitate changes if the client feels confident enough to make them on their own. But the client never loses out on the security of a personal relationship with a real person who understands their needs.

While some see this technology as being disruptive in this space, I believe it’s a digital renaissance that is going to enhance the role of genuine independent advisors. I think that the tech-and-touch model of the future will mean that clients get the best service, but don’t lose out on personal attention. It’s a win-win situation for clients and financial advisors.

Eugene Maree, is director of Wealthport.


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