Digital Agility: By Adam Malamed

Independent advisors have far more freedom to flex their entrepreneurial muscles than their wirehouse peers. This, among other things, provides them a better opportunity to supercharge growth, increase profitability and meet a wider variety of client needs—a win-win for everyone.

For years, creating this dynamic has largely been viewed through the lens of an advisor having the option to choose the best investment solutions, service approach and compensation model for their business. While finding the right level of customization in those areas is key, an increasingly important part of that equation is what I like to call digital agility.

The concept is not just about having a good website and a strong presence on social media— though those things are crucial. Instead, digital agility is more encompassing, referring to an advisor’s capacity to adapt to rapidly changing industry conditions by embracing the latest technologies.

Let’s take a closer look.

Client Experience

A few years ago, many industry observers forecasted doom for financial advisors, predicting that platforms like Robinhood and Acorns would soon make them obsolete. That has not happened.

Even young investors—the demographic presumably most comfortable with an online-guided planning experience—crave what you provide: human financial advice. A recent study found that over 60% of Gen Z and millennials believe that working with an advisor is the “key to achieving financial success.”

That said, clients across all demographic groups want cutting-edge digital tools to complement the advisor-client relationship. Notably, simply having a portal on your website or an app allowing them to schedule meetings and access important documents isn’t enough.

You need to allow them to personalize their digital experience with your firm, somewhat like how you tailor in-person meetings to their needs and communication preferences. Also, provide access to expert market commentary and educational tools, like loan, college savings and investment calculators. And think about offering the ability to take on more complex tasks, like conducting a scenario analysis against their portfolio.

Business Management

There’s been a lot of talk in recent years about fee compression, thanks to offerings such as asset management becoming increasingly commoditized. But this chatter largely misses an important point about any business: Clients (customers) are willing to pay for value.

Therefore, advisors have to remain hyper-focused on constantly creating better, more memorable experiences. In part, that’s about offering differentiated products like private credit or hedge funds and enhanced services, including tax, estate and cash flow planning expertise.

Still, an equally important priority should be to add scale via the latest operational tech tools. That will help to increase efficiency, freeing up time to deliver more high-touch, personalized services to clients. Because of that, AI that automates a range of back-office functions, including basic administrative tasks and routine service requests, is no longer a luxury—it is a necessity.

Going forward, other AI-powered innovations that transcend service could become just as imperative. Imagine how much easier it would be to increase revenue and win new business with an offering that produces meeting notes, streamlines compliance or provides predictive analytic data to help stay ahead of emerging trends.

Marketing

Wealth management continues to be a referral-driven business. But in today’s digital world, clients, especially younger ones, are not likely to hire an advisor based solely on a referral. They will go online to validate an advisors’ credentials, no matter how much their friends or colleagues vouch for them.

That’s why advisors need clean, attractive and modern websites that clearly explain their services and qualifications. To establish even more credibility, produce and distribute compelling content about relevant topics through videos and social media channels like LinkedIn, Instagram and TikTok.

Our internal analysis indicates that advisors who frequently post and advertise on these platforms create far more business opportunities than advisors who shun them.

Videos are especially effective. Research shows that the use of video increases email click-through rates by 300%. Further, businesses that leverage video content grow revenues 49% faster, while 90% of customers say videos help them make purchasing decisions.

Putting It All Together

Digital agility is not about any one technology or strategy. It’s more of a mindset. In a rapidly changing industry, financial advisors need to appreciate the need to continuously adapt to meet the evolving needs of customers and their own businesses.

However, it’s important to note that not all advisors can calibrate their practices in response to industry shifts. That unique luxury is limited to independent advisors who are armed with the right tools and the most accommodating partners.

As the so-called Great Wealth Transfer continues, with millennials and Gen Z set to inherit about $80 trillion from their parents and grandparents in the coming years, that makes digital agility all the more critical.