Convergence of technology and client engagement to define next wave of financial planning: SEI

Demographic, technological, and market changes are dramatically impacting the way financial advisors interact with clients

Convergence of technology and client engagement to define next wave of financial planning: SEI

Demographic, technological, and market changes are dramatically impacting the way financial advisors interact with clients and define successful client relationships, according to a whitepaper by SEI titled The Next Wave of Financial Planning.

The rapidly changing landscape is affecting every aspect of the industry and is forcing advisors to change the way they deliver advice.

The paper reveals a number of key strategies that advisors will need to ensure long-term success.

Co-authored by SEI and Michael Kitces, CFP publisher of “Nerds Eye View,” the paper includes firsthand insights from industry influencers and original research from SEI.

SEI Advisor Network managing director and head of practice management services John Anderson said, “For any advisor that hopes to sustain and grow their practice, the future is now. The successful financial advisors of tomorrow will look very different from those of yesterday in the way they interact with clients and how they leverage technology. In order to be among the most successful there are a number of steps that financial advisors should be taking now.”

Kitces said, “Financial planning is in the midst of a generational shift, amongst both financial planners themselves and the clients they serve. Coupled with the accelerating pace of technology change, this transition period provides advisors the opportunity to take their practice to the next level, but also presents the risk of falling dangerously behind the curve. Our paper on ‘The Next Wave of Financial Planning’ was created to help advisors understand where they need to focus now, to position themselves to excel in this new reality.”

SEI Advisor Network managing director and head of new services and strategic partnerships Raef Lee remarked, “Technology has already had a transformative effect on financial advisors over the last decade. In the years ahead, the impact of more recent developments like robo-advisors will continue to push traditional advisors to find new ways to leverage technology leading to a whole new breed of what we like to call techno-advisors.”

The eight specific strategies outlined in the paper provide advisors with a way to structure their firm’s operations to enable sustainability and growth.

These actionable steps can be incorporated by firms of all sizes and do not require capital expenses to deliver results.

In addition to these strategies, the paper also notes some of the key drivers of change within the financial advisory industry. Each points to the continued convergence of technology and client engagement, and include:

– The Evolution of Advisors and Planners – Nearly two-thirds of financial advisors classify themselves as financial planners or wealth managers, yet only 26% actually offer services that meet the definition of being a financial planner or wealth manager, according to the paper. True wealth managers need to clearly communicate the higher level of service they offer to clients, and what makes them more than just a traditional investment manager.

– Multifaceted Market Segments – According to the paper, nearly two-thirds of the U.S. population was born after 1964, the year that is considered the cut-off for baby boomers. These shifting demographics mean advisors will need to adjust service strategies to account for generational differences.

– Innovative Financial Planning Tools – Technology has changed the way that advisors share information with their clients. What used to be done by pen and paper can now be done with financial planning software. According to the paper, a surprising 29 percent of financial advisors still do not use financial planning software.

– The Effect of Robo-Advisors – Seen by some as a potential low-cost alternative to a true financial advisor, the paper suggests it’s more likely that the future investor will require a mix of robo-advisor strategies with more personalized human service.