Financial Advisors and Digital Transformation: Lessons from a Florist

Written by: John Tyers | AdvisorEngine 

Saturdays are made for soccer. I’ve found myself looking forward to Saturdays all fall. It’s when I get to watch my seven year-old daughter take the pitch. It also doesn’t hurt that we have been fortunate with perfect, crisp, fall weather to go along with the play. This past weekend, I had the pleasure of meeting a grandfather on the sidelines. He was in town visiting one of the other players. For the purpose of this article, I’ll call the grandfather “Sam.” After exchanging pleasantries, Sam asked, “What do you do?” I gave him my brief headline and quickly responded, “What do you do, Sam?” It turns out Sam is a florist. I found my conversation with Sam the florist enlightening and worth reflecting on. Me:  “So Sam, my mother lives in Hilton Head - when I send her flowers, I google and locate a local florist that I then order from. Do you do much online business?” Sam:  “Oh yeah, I hired a digital marketing company to develop our site, set up our SEO and drive sales.” Me:  “How do you drive traffic? Do you engage in paid search or pid ad placement?” Sam:  “Mostly paid search, we try to be the top ranked result. We’ve looked into geo-targeting and do some geo-marketing, but mostly it’s paid search.” Me:  “Do you know if your online traffic is mainly from local traffic or other locations?” Sam:  “Sure, we use Google Analytics and I know how many visitors I have monthly and where they’re located.  About 60% of our visitors are local.” Me:  “I don’t want to push you here, but do you know what percentage of your sales are online from non-local users.” Sam:  “Sure, about 40% of our sales are online from people not located near us – like your example of ordering flowers for your mother in Hilton Head.” Sam:  “So what kind of technology does your company offer? Me:  "Well, if you were an independent investment advisor, you would use our technology to support running your business. We enable capabilities like, an advisor portal to access your clients investment accounts, trading, billing, performance reporting, digital account opening and CRM. We make it easy for advisors to deliver advice traditionally, in-person as well as engage online. We also offer advisors the ability to set up their own branded online digital advice offering so they can serve clients that only want to engage digitally.” Sam:  “I understand there’s a really large transfer of wealth taking place right now and financial advisors are scrambling to figure out how to make sure they get the business of the next generation.” Sam is clearly well-informed. We talked a bit more as we watched my daughter’s soccer team win their last game of the season (proud dad moment). Sam’s understanding of small business digital marketing and the metrics on his digital business was impressive. It got me wondering how many independent advisory firm owners were as digitally savvy as Sam?

Digital Transformation 

There’s a lot one can learn from Sam the florist. We all need to be poised and ready to respond to digital movement, client demands, and demographic opportunities. The “Great Transfer of Wealth” is upon us. It’s often discussed like it remains far in the future, yet it’s happening now. People have been talking about this wealth transfer for 10 to 15 years - it’s even made its way to Sam the florist. Yet, as I’ve seen the AdvisorEngine team engage with advisory firms it strikes me that there is a massive cohort of advisors who have yet to adapt digitally. Digital transformation doesn't happen overnight. It is not just about buying new technology to replace old. Digital transformation is re-thinking strategy, business models, client journeys, client preferences, and new opportunities with a digital lens. It seems certain that if we fast forward to 5 years from now, more people will invest with little or no verbal communication with an advisor. Communications will be via text, email, interactive client portals, video and web meetings and in many cases - the communication will be automated, yet personalized. Few accounts will be opened using paper forms, sticky notes, and FedEx packages. Importantly, high-net-worth client relationships will convert to multiple, mass affluent relationships as parents pass their assets to their multiple adult children. Given the certainty of our future and the digital behaviors of investors taking place today, I wonder when the majority of advisory firms will catch up to Sam the florist? When will the majority take greater advantage of a technology focused approach?

T3: Technology Tools for Today 

Ironically, I am writing this as I return from Fort Lauderdale where I attended the Joel Bruckenstein’s T3 (Technology Tools for Today) enterprise technology summit. This summit is a great resource to help wealth management firms discover the best technology and enterprise solutions for their firms. The question I asked many of the attendees - what percentage of advisory firms do you think have really transformed their business digitally? The highest answer I heard was 25% - most said less than 10%. Sam the florist was able to rattle off the statistics instantly. Can you?