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Too often, the technology that claims to make our life easier turns into ongoing frustration. In a quest for the perfect tech stack, advisors choose software that is supposed to do-it-all, only to fail to deliver on that promise.
Do advisors need to accept that technology will forever be a drag, or can the right approach lead to personal happiness and a more productive practice?
Well-being or happiness is hard to quantify but relatively easy to detect. Happiness is enjoying life and getting the most out of it. That means eliminating as much stress as possible in your operations and connecting to your clients in a meaningful way.
The Kitces Research well-being survey, based on nearly 3,000 advisor responses, segmented advisors into two camps: the thriving and the struggling advisor. Struggling advisors represented the bottom 14% in terms of well-being; thriving advisors accounted for the top 14%.
The thriving advisor
The thriving advisor had a greater sense of well-being and worked five fewer hours per week than the struggling advisor. The thriving advisor derived greater value from the hours worked, resulting in higher gross margins.
Not surprisingly, the thriving advisor spent more time with clients engaged in meaningful dialogue and learned to leverage available time to handle bigger, more complex, and profitable issues.
The Kitces Research survey, conducted in the Fall of 2021, found that COVID had little impact on advisor well-being or the profession in general. Since then, however, I’ve seen a major shift in how people communicate and conduct business. It’s now accepted practice for workers to operate out of a home office, and for clients of all demographics to shop or check retirement accounts via mobile devices.
Connecting with clients
An interesting albeit unsurprising finding in the Kitces Research survey: Thriving advisors spent 24% of their day in client meetings versus 17% for the struggling advisor. That additional client-facing time could be the reason thriving advisors tended to have more affluent clients, charged higher fees, and generated more revenue per client.
Client engagement doesn't necessarily mean meeting face-to-face or on the phone. Yes, it certainly means virtually meeting via Zoom or another app. However, the best advisors broaden their idea of what it means to engage clients. They know their clients expect to experience the same flexibility and connectivity with their advisor’s portal as they do with their bank app or shopping site. Driven indoors and online, mobile adoption in every demographic accelerated during the pandemic. Unfortunately, the wealth management profession hasn’t kept pace with the new communication preferences of advisors or clients.
All advisors are dependent on a tech stack or platform to run their business. Apps and upgraded capabilities are often tacked on to legacy technology that doesn’t account for the more streamlined way we consume and use information. I talk with many advisors who are overwhelmed and confused by the demands of their technology. Many applications in those platforms are non-essential, burdensome, and rarely used.
Platforms have the capability for advisors’ clients to access their accounts. This is an admirable feature. You want a client to feel that their advisor is transparent and accessible and that they can check their account whenever or wherever they want.
If these features are so important, why is it then that most advisors say that only 10% – 15% of their clients access their portal in any given month?
Engagement rate: The new metric for happiness
“Engagement rate” – the percentage of clients that engage with their money online via the advisor’s technology in a month – is a new metric that is an important leading indicator of advisor well-being. As the Kitces Research report showed, and I hear from many advisors, the more you engage with your clients the more confidence they have that they’re in good hands.
The happiness of advisors is directly correlated to the happiness of their clients. Greater happiness for you and your clients can be achieved through fierce prioritization in your use of technology. Ask yourself three questions:
- What’s important for me to see and do?
- How easily can I accomplish my tasks?
- How smoothly can I engage with my clients?
Advisors who offer an elegant digital client experience have a competitive edge. I’ve seen engagement rates shoot up to 90% with an intelligent experience design that ties together web, mobile, and messaging-based interaction. The next time you consider a wealthtech solution, ask the provider what their typical engagement rate is. Chances are they won’t know, and if they do, it won’t be over 20%. To be a thriving advisor, engage with clients.
In our digitally connected age, engagement rate, assisted by technology, is the critical metric.
John Prendergast is CEO and co-founder of Blueleaf, a leading all-in-one platform for RIAs and broker-dealers to deliver exceptional advisor and client experiences while simplifying operations. John also co-hosts The Augmented Advisor podcast, featuring industry leaders sharing tools and insights to succeed in a digital world.