WEALTHTECH INSIDER: How Advisors And Their Clients Can Achieve Success By Leveraging Technology

How advisor tech creates - and displays - value to clients


Dear Reader,

In recent Wealthtech Insider columns, I have discussed and expanded upon four pillars of our technology-enabled fiduciary process that help create success between advisors and their clients:  Prospect, Plan, Invest, and Achieve. Today, we’re going to further discuss the final pillar, Achieve.

Today, Brendan McConnell, Orion’s Executive Vice President of Enterprise and TAMP Products, explains how advisors and their clients can achieve success by leveraging technology to more directly serve their needs and goals with more personalized investment solutions.

Remember that, by our definition, to Achieve means to help each investor reach their personal definition of success.

Kelly Waltrich: Thank you, Brendan, for joining me today. Before we talk about how technology allows advisors to offer more personalized investment solutions, I think we should set the stage. In the COVID-19, remote service era, why is it more important than ever for advisors to have the right tech stack in place?

Brendan McConnell: The obvious answer here is that advisors are meeting less with their clients in person, so they need more digital engagement tools. The pandemic has, in part, accelerated the adoption of these tools.

Clients are now looking for ways to receive advice and financial planning by digitally engaging with advisors. Whether it be video conferencing, digital account opening with e-signature, or tools that allow clients and advisors to interact with portfolios and plans simultaneously using co-browsing capabilities, mobile access was a big deal for clients before the pandemic, and is even more so now.

The use of e-signature alone has been growing for the last five-to-seven years – but this year, I think it’s accelerated to the point that we’ve seen a decade’s worth of growth in e-signature adoption year-to-date.

Kelly Waltrich: What kinds of tech tools and insights are you seeing in this environment that are very effective? What are clients responding to?

Brendan McConnell: The ability to create personalized experiences. Advisors can now capture all of the data about a client, understand their needs, and the technology out there can now put all the pieces together to create a tailored offering that speaks to the client’s goals – and do so in a way that can scale efficiently.

A good example of this trend is direct indexing, which gives advisors a greater capability to provide a personalized investment experience for their clients because they are now able to create a custom index tailored to that client’s needs.

Kelly Waltrich: To what extent does direct indexing technology help an advisor show the value of their investment offering?

Brendan McConnell: I think the biggest value add is around tax management in taxable accounts – direct indexing gives advisors greater control and a more robust ability to engage in tax loss harvesting within an index. But we shouldn’t minimize the advantages of personalization.

Maybe a client has a low-cost basis position or a concentrated position that they do not want to sell. Direct investing allows an advisor to build a portfolio around that position. It can also provide additional value around driving client behaviors.

Traditionally, in the ESG and Socially Responsible Investing space, there has been a lot of capability around screening out different sectors that a client didn’t want to own – direct investing allows practitioners to build portfolios that are personalized with conditions that mean something to the client, which should help them stay invested during times of volatility.

Kelly Waltrich: What developments in this kind of technology are exciting to you, as we head into 2021?

Brendan McConnell: One around direct indexing would be fractional shares, we’ve seen the introduction of fractional share capability by many of the custodians over the past year, which opens up the possibility of direct indexing for much smaller accounts. The masses will have the ability to access a truly personalized, fully indexed portfolio with fractional shares.

In general, we’re starting to see some really cool use cases around big data and advanced analytics, which give the advisor information or data that they can use to create more personalized client experiences – for example, personalized reporting will give the client more insight into their specific goals and progress, and should also be able to help the advisor scale their advice across a larger client base.

Kelly Waltrich: How can advisors show clients the value technology adds to the advisor-client relationship?

Brendan McConnell: This goes back to helping the client stay informed about their plan and helping them stay on track. When advisors and clients interact with technology more, it allows the advisor to engage the client continuously around their finances, inform the client in real time, and help the client stay on track.

The use of data within a personalized experience also gives the advisor more sway to manage client behaviors better, because it can help them to understand where a client’s behavior biases are and then use technology to deliver the right insights to help the client stay the course.