Plenty of financial advisors are good at helping clients invest and create financial plans. However, the quality of the services they offer can differentiate the great ones from the merely good. A new report offers hope for those falling short.
Investors’ wants and needs from advisors are becoming increasingly complex and personalized. It’s no longer enough to simply nail the right frequency of in-person client meetings.
In the near future, clients will still desire their wealth manager to ask them what they want. But clients will also expect advisors to know their wants and needs and present unprompted, personalized solutions, according to Capgemini’s Top Trends in Wealth Management: 2020 report.
Advisors should make an effort to leverage “emotional analytics” to acquire and retain clients, shape decision making, and figure out what it is they want, the report says. It’s less about replacing the advisor and more about a computer taking care of some steps in the discovery process with investors.
It might sound like science fiction but there are examples of these artificial intelligence tools in use already, the report points out.
Benjamin, a virtual assistant to advisors, analyzes investor responses, identifies motives and initiates conversations with clients based on their emotions. IPSoft’s “virtual agent” named Amelia “does more than just recognize keywords and user questions. She observes, learns, understands and grows her skills over time,” according to the software firm.
This year, Cetera Financial Group said it would begin using Insights Advise, a software by Swiss fintech company NVISO, that observes investors while they watch videos and then makes predictions about their financial priorities.
Before advisors roll their eyes and balk at the idea of a computer becoming part of the relationship with clients, they should consider this: Clients want this, especially young rich ones. A significant majority of high-net-worth investors (84%) say they want more digital interaction when obtaining advice and service from their advisor, according to Capgemini’s World Wealth Report 2019 survey.
The same report also showed the primary criteria for selecting a wealth manager was service quality, above risk diversification, fee structure, and historical performance. Unsatisfactory service influenced 87% of high-net-worth investors to switch wealth managers.
Recent academic studies have also supported more and better use of psychology by advisors and tools to help investors.
Sarah Asebedo, a professor at Texas Tech University, co-authored a study published last month in the journal Psychology and Aging that suggests personality tests might also be useful to advisors looking to gauge their clients’ funding needs in retirement.
“I think it is smart to not only gather information about a client’s financial situation, but to also gather data about who they are as a person,” she told RIA Intel.