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Financial Advisors Need to Get Serious About Implementing Tech

Date: July 28, 2021

Financial advisors have been slow to adopt tech into their businesses. Only about 40% of advisory practices utilize software for financial planning, portfolio management, or customer management. The reason for the slow adoption seems to be a concern that the software won’t really bring enough value to justify the price. In a 2019 study tracking feature usage across its clients’ software, Pendo found that, on average, customers used just 12% of the features available to them on a regular basis. 

As a financial advisor, the numbers just don’t seem to add up. Why pay 100% of the price to use just 12% of the product? However, that’s not really the full picture. Implementing tech into your business can bring more value than you realize if a) you take the time to understand all the features, and b) you delegate to that new tech effectively.

Why Financial Advisors Should Delegate to Tech

In a survey of about 2,000 advisors, Cerulli found that many advisors believed tech was too expensive and wouldn’t provide a high enough return on the investment. However, that same survey also found that this couldn’t be further from the truth. In fact, those who embraced technology the most saw the biggest spike in productivity, leading to a dramatic increase in asset market share. The differences were astonishing:

On average, heavy tech users managed $239 million in assets per practice, while medium-tech users managed an average of $183 million and light tech users were managing an average of just $106 million. 

It makes sense. When advisors delegate routine administrative tasks to tech and take advantage of financial planning and portfolio management software, they’re able to free up more time for delivering better service to existing clients and prospecting new clients. 

How to Measure the Value of Tech Beyond the Price Tag

In order to understand the reason behind this extraordinary real value of tech, advisors need to move past a simple cost perspective. You need to think about what that tech is actually replacing. 

My method for doing this is to value the technology as if it were an employee. If an employee did the work that this software is doing, how many hours would they spend each week doing the tasks that would be delegated to this technology? How much would the employee who does this get paid for those hours?

For example, say you didn’t have this technology and instead had a part-time administrative assistant to handle these functions. As a conservative estimate, let’s say they work 10 hours a week for $15 per hour. You’d be spending $150 each week. If the software is cheaper than that, you’re already saving money. 

However, the value of delegating more tasks to tech doesn’t just come from saving on labor costs. You’re also adding to the overall productivity of your staff.

Think about how many hours you and your team currently spend on scheduling meetings, setting reminders, drafting emails, typing up handwritten meeting notes, and other routine admin tasks.

Now think about all the ways you and your team could use those hours to grow your practice if you had software that could handle all those tasks for you?

The boost in productivity that comes from automating these essential but time-consuming tasks is where the real value comes in. Beyond saving a little extra money on labor, you’re actually increasing the overall capacity of your practice and this is precisely why Cerulli found that the more a financial advisor relied on tech, the more time they had to acquire and manage more total assets.

How to Invest in the Right Tech to Grow Your Practice

This doesn’t mean that financial advisors need to buy every hot new trend they see. In fact, the pessimism advisors expressed about tech’s potential is likely coming from having been burned before by new tech that turned out to be more hype than value. 

The best way to steer clear of the hype and find the software that actually makes sense for your business is to take stock of how you and your staff currently use your time. Which tasks are eating up the most hours out of your day? 

Look for software solutions that you could either delegate those tasks to or at least partially automate them in a way that makes them less time-consuming.

How to Unlock More Value from Your Existing Tech

Once you have that new software, the key to actually seeing that spike in productivity is to make sure you’re unlocking its full capacity. The number one way to do this is to use all of it. Remember, an average of just 12% of a software’s features get used on a regular basis. 

Learning how to effectively implement the other 88% of your existing software’s features will go a long way toward increasing your practice’s productivity. So go through the tutorial. Sign up for the developer’s webinar. Schedule that one-on-one consultation. Invest in training for both you and your staff.

For Pulse360’s notetaking and documentation software, for example, we offer live 30-minute web demos where we’ll walk you through how the software works and answer any questions you have about it. Look for similar offers for other software you already own or are considering adding to your toolkit. 

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