Published June 17, 2021
In retrospect, it’s amazing how far the independent investment advisory business has advanced over the past three decades and there is no doubt that technology has played a key role in that progress. In fact, the benefit to independent advisors from the last 30 years of technological advancement is the greatest yet seen in the industry’s history.
The evolution of technology and the mainstreaming of today’s digital age are best categorized into two distinct eras – the pre-internet era and the modern era. Looking at the technology available prior to the advent of the internet (introduced to the public on August 6, 1991, almost exactly 30 years ago), innovation was limited to the land-line telephone, the fax machine, and early mobile phones (the first handheld phone call was made in 1973).
Wirehouses may have been known for providing adequate back office support to stockbrokers, but the technology provided by these behemoths always lagged that of the independent broker dealers. Merrill Lynch might have had exclusive rights to the Bloomberg terminal when introduced in 1982, but it is independent advisors that enjoyed – and still enjoy – superior technology in many other aspects of the business.
After widespread adoption of the internet, advisors found a world of infinite possibilities to enhance the client experience in ways previously unimaginable. These new technologies enabled early-adopting independent advisors to further distinguish their client services from those of wirehouse firms that remained bogged down by legacy systems and a slow-to-adopt mindset.
More recently, we see a mobile revolution among advisors and clients, with the expectation that information should be available anytime, anywhere. In many respects, this has strengthened advisor/client relationships, but only for those advisors who have embraced technology and made a commitment to stay on the forefront of new advancements.
Yet the rise of more technology also has forced advisors to contend with entirely new entities, including free-trading apps and so-called “robo-advisors,” which require little to no human interaction. Despite those headwinds, the needs of investors for all aspects of financial planning and wealth management continue to drive demand for professional advice that only a real advisor with a personal connection can provide.
The Rise of TAMPs
Perhaps nowhere is technology more relevant than when it comes to investment management. Advisors seek to be as efficient as possible in managing clients’ investment portfolios so they can spend more time doing what they do best: working with clients to build secure financial futures.
Because Turnkey Asset Management Platforms (TAMPs) allow for the outsourcing of time-consuming investment management functions, we’ve seen TAMP adoption grow exponentially in recent years. According to Fidelity Investments’ research, advisors who outsource investment management are growing faster, have higher incomes, and manage more AUM than those who do not. And, 57% of clients have no preference if their advisor guides asset allocation in-house or if portfolio investment decisions are outsourced, according to a study by TD Ameritrade.
For advisors who prefer to use third-party investment models instead of building their own models, TAMPs offer model portfolios constructed and managed by many of today’s premier asset managers. These portfolios include a wide variety of fixed income, equity, and alternative investments designed to meet the specific needs and objectives of each individual client.
A modern TAMP can also help RIAs better manage their overall practice by providing a centralized digital dashboard and better serve their clients through an online portal that is transparent, seamless, and efficient. These are must-haves in today’s world, along with sophisticated and customized reporting capabilities so that clients are kept informed of their financial picture on a moment’s notice.
Strengthening Client Relationships
GeoWealth’s technological proficiency and keen understanding of the challenges and opportunities independent investment advisors encounter every day, allow us to quickly respond to the changing demands of your business. By streamlining the common tasks that are essential to your practice, GeoWealth gives you more time and freedom to strengthen client relationships and prospect for new clients.
Increased use of technology is also inexorably leading to lower-cost services and client expectations for lower fees overall. This puts a premium on client service and the things that differentiate you, the independent advisor, from your competition (both in robo/digital and human form).
From a cost perspective, advisors realize lower fees through GeoWealth’s unique position as both the designer and developer of our platform. This lower cost can then be passed on to clients through lower advisor fees, while the advisor can increase their spend on marketing and prospecting tools to further scale their practice.
The bottom line is this: Advisors should look for a TAMP partner that has harnessed the power of technology for advisors, one that innovates, invests, and grows alongside them. Ultimately, the benefit of more advanced technology is that advisors are able to focus on helping clients with larger and more important life questions – such as when they should retire and how to structure their inheritance for their heirs – and thereby solidifying their role as a trusted advisor in their lives, not just someone who can generate a target rate of return.
Contact GeoWealth today for more information about how we can help you harness the power of technology for your clients.