Sales Enablement

Enhancing the client-advisor relationship with technology

Thomas Bosshard
  • Thomas Bosshard


  • Sales Enablement

Survey results, particularly of high net-worth clients, show that many of them still rank the personal rapport they have with their advisors much higher than a wealth manager’s technological capabilities. Therefore, experts in digital business models agree that the wealth management business should steer towards a hybrid advisory model, i.e. a combination of digital capabilities and human advice, in other words, where one empowers the other. The most successful advisory models provide a flexible amount of human interaction based on client needs.

Which technologies help financial advisors understand their clients better?

Apart from investment performance perhaps, the client-advisor relationship is still what high net-worth clients value most. Technology cannot replace this need. This does not mean that technology should take a back seat, especially since it can truly help advisors be more efficient at what they do. However, the recent proliferation of tech tools makes finding the right ones overwhelming. So which new technologies should wealth managers preferably get comfortable with?

The main advantage of enhancing digital capabilities lie in improved efficiency and the ability to engage more broadly with clients. The main areas where technology can offer these benefits are client engagement, customization of investment advice, and optimization of back-office processes.

Client engagement

The digital transformation of the consumer goods sector has spilled over to other sectors, including financial services, leading to changed expectations. Online customer engagement is quickly becoming mainstream. Fintech has jumped in to cater to this demand and has made investment advice more accessible. Investing has become easy. Algorithms do the hard work, and they do not differentiate between the affluent and less affluent, thus opening investment to a much larger client base.

Particularly emerging investors—the high net-worth clients of the future—are expecting changes to how they interact with their financial advisors. Younger generations find it more natural to use online apps than to give their advisors a call or make appointments. Getting a quick answer to their questions online is less complicated. They are also used to immediate access to information at any time and in any place via their smartphones. So they may only want to interact with their financial advisors if they do not succeed or it takes too much time and effort.

Communication tools have also changed. If more and more people use Skype or FaceTime to communicate face-to-face with family and friends from the comfort of their homes, talking to their advisors via these tools is only a small leap. Shying away from communicating with these tools for whatever reasons will certainly not go down well with this particular clientele.

Customized advice

We are also becoming more used to customized offers, e.g. from platforms such as Amazon or Spotify, and would expect to receive the same personalized experience from any other company we do business with. The algorithms behind personalization draw on knowledge a client provides online. Along with data from transactions and online behavior over time, a data-driven picture of an investor’s needs emerges, which enables digital platforms to recommend investment strategies or model portfolios with little to no human supervision. Interacting digitally with clients can garner greater knowledge of a client investment needs and motives. In theory, this fuller understanding of clients should lead to delivering better investment solutions. However, not for everyone.

Robo advisory platforms typically calculate and suggest investment strategies in response to a catalogue of questions. Because they only process high-level information about clients, their output consists mainly of generic portfolio recommendations. Online question catalogues are usually restricted to basic information on a client’s financial situation, objectives and risk tolerance. Without a more nuanced input, these platforms will probably not be able to handle more complex investing scenarios. In other words, the less differentiated the input, the more generic an investing platform’s output.

This is where a human advisory creates clear value. Once clients accumulate enough assets to be considered high net-worth, their needs become more complex; they also become more involved in investment decisions, and the importance of digital capabilities declines. If there are no quick answers to their questions that they can find online, they will turn to human expertise. And if financial advisors are then able to deliver, a relationship of trust is will establish itself on its own. Investing can then become a more human-led approach.

This does not change the fact that clients are beginning to expect their Robo advisory platforms to “understand” them. The questions remains who will be better able to do so in the long run – their digital platform or their advisors.

Portfolio building and management

Managing investments using automated technology can have clear advantages. An algorithm can analyze more data more quickly than the human brain. The data can also be gathered over time and show more accurate trends. However, technology that is more sophisticated, e.g. machine-learning algorithms, should still be approached with care. They offer no explanation as to how a decision is reached, a problem described as AI’s “blind box”. In other words, blind trust in technology is required. Explainable AI solutions (XAI) would offer clues to a machine’s reasoning, thus enabling humans to learn from algorithms.

Understanding and being understood both seem to be key when it comes to building trust. If the technology behind personalization helps advisors understand their clients better, then adopting it is money well spent. For example, it is helping advisers focus less on investment management — much of which it can automate — and more on building client relationships. Anything the client-advisor relationship can benefit from is useful innovation. This can also be by automating back-office processes, thus freeing advisors for more client-facing work and comprehensive financial planning.

Wherever possible, streamlining the wealth management process can help advisors focus on fostering stronger, more meaningful client relationships. If you are interested in learning how Adviscent’s products and services empower financial advisors, please contact Thomas Bosshard.

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