Transparency and Communication Help Advisors Shine in Digital-First Environment

August 5, 2020 — Boston

Volatile markets present a unique opportunity for advisors to prove the value of their advice to clients, according to the latest The Cerulli Edge—U.S. Advisor Edition. Although market performance has generally rebounded, uncertainty and concerns about the COVID-19 pandemic linger. As advisors adjust their processes to this digitally-oriented climate, firms must evaluate how to best support their advisor forces through disruption.

As investors navigate challenging times, it becomes increasingly critical that advisors exhibit empathy and effective communication skills. “An advisor’s bedside manner can make or break the advisor/investor relationship during turbulent times,” according to Marina Shtyrkov, senior analyst. Investors seek an advisor who provides transparency, reassurance, and tailored guidance. According to Cerulli’s research, 56% of investor households rank transparency in interactions as extremely important when choosing an advisor. More than half (51%) of investor households consider an advisor taking the time to understand their needs, goals, and risk tolerance to be an extremely important criterion.

To secure investor confidence, Shtyrkov suggests that advisors create thoughtful, engaging outreach that addresses client concerns, demonstrates support, and ensures that any newly arisen issues can be adequately addressed. Advisors need to find new ways to cut through the noise, not add to it. Clients already receive a constant stream of news and market commentary. The advisor’s role is to show how it applies to their circumstance. To help advisors focus on the frequency and clarity of their communication with clients, broker/dealers (B/Ds) and custodians can create turnkey client outreach resources. These toolkits support advisors in establishing the right cadence and content of messages.

The digital-first environment created by the pandemic also offers a unique test of firms’ technology capabilities. Enforced social distancing measures triggered new adoption of technology among many practices slow to embrace virtual meetings and other digital processes. Prior to COVID-19, nearly two-thirds (66%) of advisors conducted a digitally-based review meeting with clients on at least an annual basis; 30% never conducted them. Cerulli anticipates that the pandemic becomes the catalyst for a rise in adoption and innovation of wealth management technology.

Many B/Ds had already started building or assembling integrated end-to-end platforms, making major investments in technology to modernize their offerings and improve advisor efficiency. For instance, in 2019, 70% of advisors reported using e-signature technology and an additional 13% were planning to incorporate it by 2021. Likewise, 60% of advisors were using document management or cloud storage, and 11% anticipated adding these tools. The virtual environment for many advisors highlighted their firm’s digital shortcomings, and as a result, accelerated the progress of those technology initiatives.

“By shepherding clients through difficult—and unexpected—conditions via newly adopted digital technologies, advisors can demonstrate the importance of having a sound financial plan in place,” adds Shtyrkov. “Those who are successful in doing so, in turn, position themselves favorably for referrals from satisfied clients who spread the word to their network.”

Note to editors

These findings and more are from The Cerulli Edge—U.S. Advisor Edition, 3Q 2020 Issue.

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