3 Steps for Building a Tech Stack to Deliver Financial Wellness

Journal of Financial Planning: February 2020​​



Over the past several years, technology has disrupted the wealth management industry in almost every area. Back-office operations, portfolio management, and even in-person client meetings have evolved. Most recently, technology is changing client expectations about the entire advisory relationship—from the first investment forward. As a result, software is not just an enabler for everyday adviser activity like performing market research and processing forms; it’s key to accommodating client needs.

Today’s investors are technology-enabled and have a set of ideals in place for day-to-day interactions. Think about how you spend your day. Your iPhone wakes you up and shares notifications you missed while asleep. Alexa tells you the weather. Amazon delivers your groceries. And Uber gets you home. Evolving your practice to stay in line with technology will not only help you meet your clients’ digital preferences, but I believe it will also expedite the growth of your business.

Getting to this ideal state, where software innovation meets human expectations, means scaling your technology stack to meet client demand and grow your business without sacrificing your existing book.

Here are three steps to help you get there:

1. Create Connectivity at the Right Points

In the digital age, technology-driven offerings increasingly disrupt the advice industry. Wealth management clients expect digital platforms as a part of their relationship with advisers. As you’re building out a digital ecosystem, it’s important that you’re creating connectivity among your data and analytics, device hardware, software, and cloud resources.

This connectivity is crucial to maintaining a clear picture and unified view of where your clients are throughout their wealth lifecycle. It can also allow you to identify gaps in products or services your clients may need on their path toward achieving financial wellness.

For example, if the server that houses your client data, historical market data, and serves as your knowledge base is not connected to the application server that contains your financial planning software and other CRM tools, it is less likely that you will be able to build a plan that optimizes your clients’ outcomes, while driving efficiencies in your practice. Having an efficient, integrated tech stack allows you to deliver much more than investment allocation and portfolio construction—it will help clients understand the value you’re able to deliver.

2. Expand Communication Channels

Adding new communication channels—such as social media, video conferencing, or text—for your clients to interact with you is a great way to embrace a new segment of customers, as well as retain existing clients who are asking for new, more efficient ways to reach you.

When considering adding additional ways to communicate with your clients, be thoughtful about what mediums you employ, taking careful consideration of how and why certain segments of clients would use that channel and whether there may be any regulatory or compliance rules on certain communication methods.

Ten years ago, a quarterly or bi-annual in-person meeting to discuss portfolio performance and progress toward goals satisfied most clients. Nowadays, not all clients have time to come into the office, especially those who work full-time or have significant family obligations. Yet clients expect interactions with their advisers to be personal, direct, and convenient.

Plus, clients now have the ability to monitor their investments in real time, and they may expect to see the financial plan they’ve created with you updated on a daily basis. And when they have questions, they need to be able to communicate with you in ways that work best for them. On-demand access provides an ultimate level of transparency.

One tech trend that’s growing rapidly is adviser adoption of social media as a way to communicate with their clients. According to the 2018 Putnam Investments’ Social Adviser Study (putnam.com/advisor/business-building/social-media​), 83 percent of advisers used social media for both business and personal purposes (up from 73 percent in 2013), and 57 percent used social media “a great deal” to make initial contact with referrals. The study also found that 92 percent of advisers reported that social media helped them acquire new clients and increase their assets under management.

Moreover, clients are craving engaging and actionable advice. A recent survey from Broadridge Financial Solutions, the “2019 CX and Communications Trends Survey,” indicated that investors saw some level of customization in communications, calling them “personally relevant.” However, when asked to further describe those communications, fewer than four in 10 respondents said they were “engaging,” and fewer than three in 10 reported them as “actionable.” In addition, the survey showed that Facebook is the most preferred social media network for adviser-client engagement, with 61 percent of millennials, 38 percent of Gen-X, and 19 percent of boomers open to an adviser following them on the platform.

These findings reinforce that clients not only want advice to be delivered to them in a more engaging and personalized way, but they also prefer that advice come through some of the social channels that they already integrate into their everyday lives.

3. Organize and Mobilize Data

As the world becomes more digital, the amount of data coming out of the platforms wealth managers use increases exponentially. Data aggregation with external financial accounts allows advisers to get a broader perspective of a client’s situation and provides a seamless experience for clients when they need instant advice. For example, high-net-worth individuals can now get a full financial picture on a mobile app and quickly see the impact of a significant expenditure without consultation.

Plus, many wealth management organizations are focused on building a solid data management foundation to support both the analysis of enterprise data, as well as “big data,” which will help the enterprise and individual advisers gain valuable insights on client trends and preferences. These unified insights will allow you to identify the best use cases in your practice based on analytics. Understanding your clients’ preferences, buying history, and demographics allows you to make smarter strategic decisions on how to best engage with them, and it gives you the opportunity to reevaluate the current process and procedures you have in place to identify key areas of improvement.

Once you’ve gathered all of your data and identified various customer personas, it is beneficial to create segments based on those personas. These segments could be defined by customer needs, stage of wealth lifecycle, or buying characteristics. Without having an understanding of how your best clients are segmented, you run the risk of losing focus on where your time and resources should be spent. It also makes it difficult to adjust your business model to appeal to the next wave of investors, which is critical given that millennials are now the largest segment of the population.

Preparing for What’s Next

If there’s one constant it’s that technology, along with client expectations, will continue to evolve. It’s impossible to predict where your business will be in five to 10 years. And given the pace of change, it’s equally impossible to predict how hardware and software advancements will reshape the landscape a decade from now.

Therefore, when evaluating new technology, make sure you consider how it can grow with your practice, whether it will allow you to offer holistic advice that extends beyond investing, and continue to help you enhance the relationships you have with clients. Because, ultimately, the right technology stack will lead to increased efficiencies, allow for more personal and timely connections, and fuel and future-proof your practice.

Sean Lawlor is senior vice president and head of enterprise data solutions at Envestnet​ Inc., a provider of intelligent systems for wealth management and financial wellness. He is a member of FPAs FinTech Advisory Group.

Practice Management