Technological disruptions tend to feel like a far-away issue for wealth advisors concerned with the present, but they're happening right now.
Through artificial intelligence and other wealth management technologies, financial advisors are focusing more on client relationships, advising clients virtually across the country and offering investment strategies once reserved for only high net-worth individuals, according to Samuel Deane, the president and CEO of Deane Wealth Management in Atlanta, and Wilbur Swan, the CEO and co-founder of Boston-based Catchlight.
Deane and Swan, speaking on a panel today at
The human aspect of advising
Experts talk about the
Nearly one-third of clients surveyed said their advisor's poor relationship and communication skills were the leading reason they fired them, recent
"Leaning into the human aspect is a huge value add," Deane said. "I feel more like a therapist than I do a financial advisor in 90% of my meetings. I think that clients feel that and it's a huge value add to them. Every meeting I get off with the client, they're like, 'Thank you so much. I feel so much better, I have more clarity on where I'm going."
Deane, who uses
Automation can also save time when it comes to client acquisition, Swan said. Advisors report spending five to six hours a week on average researching potential clients on the internet, according to research that Swan and his team conducted.
"A lot of that can be automated, we can help you do this faster, get to these insights faster," Swan said. "You can do it more at scale, and play the numbers game versus relying just on one or two prospects that you're talking to actively to become your next big client."
Expanding your market with virtual advising
Pandemic-era policies that shuttered life in person drove financial advisors online, but the shift might be here to stay.
Net worth is not a limiting factor either. In fact, McKinsey found that individuals with $1 to $5 million in investable assets were more comfortable with virtual advising than were lower net-worth individuals.
Deane, whose firm has been fully virtual since its inception in 2018, said virtual advising was a natural strategy for his business even before the pandemic.
"I'm not quite sure why advisors back themselves into a corner and say, 'Hey, I'm only going to be an advisor in Pennsylvania or in Philadelphia,' when as an investment advisor, you have the ability to work with clients all over the country," Deane said.
Data shows that the shift towards virtual-first advising has picked up momentum in recent years.
"There are more and more clients across the country that [advisors are] servicing," Swan said. "Some are now pitching themselves as like, 'I have clients around the country, and I service them very well. And I'm not somebody who just services people within a 20-minute radius of me.'"
Democratizing investment strategies for more clients
Labor-intensive investing strategies like direct indexing have long been restricted to high net worth clients, but technological innovations are making such strategies increasingly
Through the
Even as a solo-advisor firm, Deane said he has been able to offer direct indexing to some clients thanks to new wealthtech offerings. Still, there are certain applications that AI is better suited for than others, Deane said.
"I think there could be some major regulation issues with AI-generated investment recommendations," he said. "I think instead of investment recommendations, we'll see something like an AI-driven rebalancer sooner than we would see a recommendation generator."
