Using Financial Advice to Calm Deposit Flight
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In the wake of recent banking instability, many financial institutions are struggling with customer retention. Spooked clients are questioning the safety of their deposits and to regain confidence they are looking to maximize their FDIC protection by diversifying where they keep their money.
How can advisors ensure that clients will keep their assets with you? The answer is to build trust.
Deposits become more “sticky” when associated with the trust built in a broader, full-service financial partnership. The growing demand for investment advice and financial advisory relationships plays a big role in keeping and growing in-house assets. The challenge for advisors is to build these strong and enduring relationships cost effectively and at scale.
Here are three digital strategies to build “trust at scale” into your service platforms:
- Use segmented service models. Traditionally, financial advisors spend the most time with their high-net-worth (HNW) clients. But today, it is important to strengthen retention rates beyond HNW individuals. Given the great wealth transfer that will take place over the next two decades and the aging baby boomer population, it is critical to grow the next generation of HNW investors. Financial institutions need to invest in clients for the long term. To do that profitably, they must position investment options aligned to client needs.
Modern technological service models allow banks to do just that. They segment their audience by asset level, enabling high-touch interactions and building engagement by providing high-quality investment advice to clients of varying levels of wealth.
These segmented tools help advisors understand the needs of all their clients, including mass- and emerging-mass affluent investors, who make up about 25% of the U.S. market. As a client’s wealth complexity evolves, these tools create a flow of leads for advisors and seamlessly grow the customer relationship.
- Automate and integrate. By automating the administrative side of the consumer-provider relationship, advisors make time for more meaningful interactions with these two key segments. Streamlining operations helped banks provide clients with a better overall experience while still providing a dedicated advisor relationship. Finding such efficiency may also lead to financial advisors spending less time revamping portfolios, doing paperwork, resolving errors and tracking down data, and more time advising clients. Automation reduces costs for providers and improves advice consistency and compliance.
Integrating workflows across fragmented tasks helps financial advisors give faster and more nuanced advice. With workflows streamlined into a single platform, and an integrated experience that offers tools like client portals and dashboards, advisors can provide richer one-on-one screen-based experiences, either virtually, in-person, or through teaching clients how to use self-service tools.
Given the number of platforms advisors need to reference, financial institutions must decide on the level of integration they need to balance cost, integration time, and the ultimate benefit of a transformation project – both for their customers and their advisors. But even a lightly integrated system that hosts legacy platforms all in one place can improve the service level available to clients.
Using a modern wealth management suite of tools that works together leads to more efficient operations and a better client experience. It positions financial institutions to serve a broader range of clients profitably – improving the economics of wealth management.
- Leverage virtual advice-as-a-channel. Shared virtual platforms create more opportunities for advisors to interact with clients. Those platforms shed light on the client’s entire banking experience – showing not just real-time balances, but also their back story, family information, their response to previous product offerings, and various other data points, which lets advisors spend more time developing the "glue" of trust that will solidify relationships.
Using modern wealth management tools to digitally engage with customers on demand creates an immersive, personalized experience that comprehensively assesses all of a client’s assets and aspects of their financial profile. It allows the client and advisor to work together to get a more holistic view of a client’s portfolio, making it easier to model investment and savings scenarios, discuss options, and make changes – all in “real time,” making virtual advice a powerful channel for new leads. This lead-building opportunity is unique to investment advising. More transactional bank products and services, like car loans and cash management, don’t allow for the personalized care and conversations that full-service investment advising offers. That’s because wealth management discovery conversations that start from a client’s specific values and goals often lead to cross-selling opportunities for advisors.
Looking ahead
Investors are demanding a better, more integrated and client-focused experience from their wealth managers. And with the impending great wealth transfer from baby boomers to younger generations, banks are recognizing the need for ever more individualized, comprehensive digital and in-person experiences for their customers. A full-service, relationship-based approach is a strong hedge against asset flight.
Leveraging technology on the back and the front end to put the client at the center of the conversation is leading to another exciting transformation in the advice industry – one that will build greater trust. Emerging technology is helping financial institutions build digital experiences around customers’ individual needs, rather than the bank’s products. For example, rather than trying to sell a CD or a brokerage account, with the support of robust and integrated financial management platforms, advisors address the client’s ultimate financial goals, such as buying a house or retiring by age 60, and model realistic scenarios using all the data available. These conversations will ignite the imagination, align the advisor and client around common goals, and form the beginning of a lasting relationship.
Mike Sha is a co-founder and CEO of SigFig.
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