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    The Effect of Digital Acceleration on Financial Advisors

    The world is different than it was two years ago. We recognize people by the top halves of their faces. We work from our couches. We bump elbows instead of shaking hands. And we spend more time online.

    Pre-pandemic, did you have a Zoom account? Did you order groceries through an app instead of heading to the local market after work? The truth is, before anyone had ever heard of Covid-19, many of us did spend a lot of time on our gadgets, but the pandemic significantly amplified it.

    That goes for businesses as well. Prior to the Covid lockdowns most companies were already on the path toward digitization, however, the pandemic accelerated it. Close to 97% of top global executives believe that the pandemic has sped up the digital transformation cycle, with more businesses than ever moving to adopt the latest technologies in a bid to leverage their competitiveness. While the financial services sector has typically been slow to adapt to change or adopt new technology, the pandemic has forced even the most reluctant of advisors to jump on the bandwagon to keep their businesses afloat.

    Here’s how the changing scope of digitization is shaping the financial advisory space.

    Digital Acceleration in the Financial Advisory Space

    Three of the main points that have come out of this pivot to digitization are that digital systems generally improve operating efficiency, digitization can open up economies of scale, and a customer-centric approach is as important as ever to build deep customer loyalty. Let’s take a closer look.

    Better Operating Efficiency

    It likely comes as no surprise to hear that digitization has helped financial advisory firms to improve their services, their customer experience, and their back-end organization.

    To begin with, recordkeeping is much more efficient. Sure, storing data in the Cloud comes with its own set of risks, but we can likely agree that it’s far superior to the filing cabinets of old. In most regulated financial markets, it’s now a requirement for firms to have automated recordkeeping systems. While it may have been daunting at first to make the switch to digital records, it’s a much more streamlined and accessible, not to mention eco-friendly, alternative—and clients tend to agree.

    Furthermore, financial advising requires gathering and analyzing big data sets to reveal specific trends. Most financial advisors rely on predictive approaches to offer reliable advice to clients on patterns in the financial markets. However, such predictions may be hard to come by when advisors are reliant on manual analysis.

    Economies of Scale

    Digitizing internal and external systems has also opened opportunities for financial advisory firms to achieve economies of scale. While working with clients exclusively online has its drawbacks, it also has proven cost- and time-effective. For starters, as many of us continue to work remotely, businesses have realized that they don’t necessarily need as much office space, leading them to either give up their office spaces altogether or significantly downsize. Downsizing on brick-and-mortar space is a huge money-saver that allows firms to focus their funds elsewhere.

    Additionally, conducting business online rids financial advisors of the geographic constraints they may have previously had. While it’s wise to focus on a specific location as far as geographic segmentation goes, it’s also great not to be bound by that specific location.

    Customer Loyalty

    We continuously stress the importance of taking a client-centric approach to everything you do as a financial advisor, but over the past two years, maintaining positive client relationships and working to strengthen customer loyalty is more important than ever.

    Just like you are spending more time online, so are your clients. This unique period of time has introduced a whole new way for clients and businesses to interact, breaking down barriers to allow for a less rigid, always-on experience. While once clients could only get in touch with their advisors during scheduled business hours, they now can consume valuable content via their advisor’s social media accounts at any time of day or night. They are more apt to easily log on to their client portal and view their portfolio. They can participate in meetings with their advisor from across the world in small time chunks instead of extensive conference room meetings. Digitization has created more flexibility and an opportunity for advisors to connect with their clients in a different, more convenient and personalized way.

    Meet Customers Where They Are

    It’s worth mentioning that no matter how great digitization is and how much you may adapt to it as an advisor, it’s of critical importance to meet your clients where they are. Tailor your technology to your clients and not the other way around.

    While some clients might be entirely on board with digitization, opting to conduct Zoom meetings and view their portfolios online, others may want a combination of a more traditional experience supplemented by digital tools. Technology can enhance the client experience, but ultimately, it should be about what the client wants and needs.

    It’s Never too Late to Embrace the Digital Acceleration Strategy

    The digital age has caused a shift in how financial advisory firms function. While you once conducted client meetings hunched over paper documents and cradling warm cups of coffee, you have likely gotten used to screen-sharing over the computer instead. Where you may have previously commuted to your firm’s office, you might now work from home. Perhaps the bulk of your clients used to live in the same city as you, while now they are spread out across the state or even the country. Times have changed, and we continue to adapt. Financial advisors who are willing and able to embrace digital acceleration will ultimately be the ones who are able to leverage a unique competitive advantage.

    At Beyond AUM, we specialize in creating client experiences that meet your clients where they are, as well as building and maintaining firms’ digital presence to continually add value. Get in touch to learn how we can help your firm adapt to digitization.