Investment advisors are going to have to change the way they
do business if they want to attract the next generation of investors according
to the article by Ram Nagappan. The
article discusses how technology is changing the relationship between investors
and investment advisors. In the past investors tended to hand over complete control
of their investments to their advisors.
They wanted the advisors to make the decisions and then meet with them a
couple times a year to discuss their investments.
This relationship worked in the past because the information
needed to make these investment decisions was not as readily available as it is
today. Today’s investors are almost
opposite of the investors of the past. They are very involved with the
day-to-day aspect of their investments because they have access to real-time
information about their investments and up-to-date news. They do not just want to have a couple
meetings throughout the year to go over information with their advisors but
instead want to frequently communicate with their advisors through different
mediums.
In order for investment advisors to stay relevant, the
article recommends that they follow a few directions. The first is embracing
technology and using it to its fullest potential in order to provide their
clients with more tools. Another step is to change the relationship between the
advisor and the investor to make the advisor more as the person the investor
goes to for advice instead of the person who completes all the
transactions. Advisors should also
increase communication with the investors through both the traditional face-to-face
communication and also through some digital means such as automatic alerts
about investments. Finally, while investors have access to a large collection
of news, the advisor should sort through the news so that investors only have
to read the most prevalent articles.
According to the article, these steps should help to keep investment
advisors relevant in the future.
I agree with the steps this article discusses but I also
feel that investors need to realize the value of the advisor. Like the last step mentions, while investors
have access to all the data and news about their investments, most will not
have the time or knowledge to digest all that information. An advisor on the
other hand will have the past experience to help them make their decisions and will
be able to sort through the news article to try and determine which ones may affect
the stock price. Companies like E*TRADE
and TradeKing provide news and analysis that are built into their trading
platforms to provide customers with up to date information about their
investments or potential investments. E*TRADE
also provides training so that its customers can become smarter traders and
have some background in order to analyze potential investments. Investment advisors are going to have to work
hard in order to build that relationship of trust with their clients in order
to retain their business as these other options become such as E*TRADE become
more popular.
http://www.wallstreetandtech.com/asset-management/advisors-must-prepare-for-the-investor-of-tomorrow/a/d-id/1317432
1 comment:
Technology is a game changer for individual investors, but the value of an advisor (as Tim points out) must be realized, especially with regard to relationship management. From my work at a financial planning firm, I know that relationships remain the key driver of the business. Financial planners build their book of clients through word of mouth; the relationships they have with clients are imperative to building and maintaining their business. As the article says, “replacing the occasional newsletter with proactive, ongoing, personalized communications -- face-to-face as well as digital -- has gone from being nice to being necessary”. Client retention and acquisition is based on an advisor's ability to meet a client's expectations with regard to wealth. I do believe that recognizing the usefulness of technology in relationship management and in client's access to information is key to the success of tomorrow's advisor, in terms of building wealth and trust.
Post a Comment