Technology is changing the face of financial advice, enabling wealth management firms to deliver data-driven, scalable solutions to their investors at a relatively low cost. These solutions are disrupting how advice is delivered, forcing financial advisors to take a long, hard look at their value proposition and the service that they deliver to their clients. Although many established wealth management firms are embracing technology-driven solutions as a way to reach a wider audience, these same firms still want to ensure that they are able to deliver higher levels of service to their most valuable customers. This is where advisors come in—provided that they are actually delivering the type of service that these valuable customers expect. As a result, advisors are grappling with how to make their services more relevant and high-touch in order to stay competitive in today’s fast-moving technology environment.
Given this, it’s no surprise that personalization is becoming increasingly important to advisors. Based on our latest advisor research, conducted in association with Horsesmouth, the vast majority (84.1%) of advisors now consider personalized service important to their value proposition, while two out of every three advisors (67.7%) believe that personalizing service to clients is more important now than it was three years ago. In the words of one advisor we surveyed, “Clients expect more than a stockbroker now, so personalizing service is more important.”
The drive to offer a tailored, bespoke experience is also impacting how advisors think about investments, with 57.3% of advisors now considering personalized portfolios important to their value proposition. However, more advisors are focusing on delivering high-touch services than on providing individualized investments and/or financial planning. When we asked advisors how they offer more personalized service to some or all of their clients, providing financial advice to their children was the top response (62.9% of advisors), with tailoring outreach to client preferences a close second (61.9%) and participating in meetings with their other financial professionals (like accountants and estate planners) in third place (59.4%). Around half of the advisors said that they personalize investment selection down to the individual client level (49.4%) and/or modify the financial planning process to suit their clients’ needs (49.1%).
How advisors offer more personalized service to their clients
In summary, the “high-tech/high-touch” divide in wealth management is here to stay. This trend is likely to become more pronounced over time, with firms offering technology-driven solutions that involve minimal human interaction to mass affluent investors and reserving high-touch, bespoke solutions for their most valuable clients. So, although personalization means different things to different advisors, it will continue to be a top priority for advisors who want to stay relevant—and profitable—in the future.
For more on advisor behavior, or their implications on asset management distribution, contact our Distribution Solutions team.
Written by Saadiah Freeman
Product Manager, Research & Consulting