New Technology Helps Advisors Give the Right Financial Advice

Cheryl_NashGuest Contributor: Cheryl Nash, President, Investment Services from Fiserv

Many investors have come to the realization that they may not meet their retirement and other financial goals on their own, and are reaching out to financial advisors for expert guidance. These investors still remain risk averse and are demanding personalized advice and transparency into their investments. Today, smarter technology solutions exist to help advisors provide that higher level of service and help position them to better serve their clients and more efficiently gather new assets.

In response to the new demands and heightened concerns of investors, financial institutions have made a shift from providing transaction-focused services, as in the past, to more advice-focused services that entail advisors understanding each client’s complete financial picture and goals. In order to support this more in-depth advice model, wealth management firms are looking to new technology solutions that enable access to the information and data needed to efficiently deliver customized advice.

Further evidence of this trend can be seen in how the financial advice industry has shifted from primarily providing commission models to fee-based services. Since the Great Recession, fee-based models have gained in acceptance and popularity because they allow for the most tailored, customized and complete advice. There are four fundamental factors driving this shift:

Changing Expectations
Investors are increasingly looking to their advisors to focus on long-term goals, such as retirement and estate planning, instead of benchmarks such as annual returns or stock market indices. This expectation necessitates flexibility, transparency and a holistic approach to advice.  By shifting to fee-based structures advisors can offer this kind of individualized service, as their income becomes less dependent on commissions from trading individual securities or mutual funds.

The recent financial crisis led to record levels of mistrust in financial institutions and the industry. To overcome this, advisors needed to establish a vested interest in their clients’ financial futures, and long-term, goals-based advising is a principal way to demonstrate that commitment.

Risk Aversion
Many self-directed investors, stung badly by two severe market downturns in the last decade, are taking a more cautious approach to investing and have now become clients for financial advisors. These risk-averse clients are causing advisors to become more dynamic. As a result, advisors must not only provide better service, but also clear value propositions that support their recommendations.

Regulatory Demands
A series of recent regulations, including the Dodd-Frank Act and FINRA Rule 2111, have been passed to inject trust back into the financial services industry. These regulations were designed to ensure that advisors are accountable for the suitability of investment recommendations for each client. As a result, financial institutions are re-analyzing their approach to advice with a goal of providing more meaningful and appropriate guidance. A demanding and ever-evolving, regulatory environment will continue to challenge existing advice models, and require financial institutions to adjust their practices to remain compliant.

Technology Innovation
In years past, comprehensive financial advice was primarily only available to high-net-worth clients who could afford to pay for these “extra” services. But thanks to advances in platform integration and in the mobile and online channels, the cost of integrating financial information from disparate sources to facilitate the delivery of holistic financial advice has come down drastically.  Today, quality advice can be delivered to a broader segment of the population as financial institutions are leveraging technology tools to offer services to the mass-affluent and the tech-savvy Generations X and Y – tomorrow’s high-net-worth investors. To develop and nurture this expanded client base, financial advice services must be cost-effective, efficient and accurate. New technological advancements can help both advisors and investors in this regard.

Seeking advice from a financial advisor will stay in-vogue as long as investors continue find value in the services offered. Client-centric advising is facilitated through the use of integrated technology that fosters access to information, enables collaboration and provides enhanced service to investors.

It is no surprise that the financial crisis left investors uncertain of their financial future, but now is the time to reevaluate financial advice capabilities. Advisors and firms that ensure the best advice tools are in place will regain investor trust and grow their assets under management.


Fiserv will be participating at FTF’s upcoming Financial Crime & AML New York conference on July 17th and the ReCon New York conference on October 23rd. 

This entry was posted in Dodd-Frank, Financial Technology, Guest Blog, Regulation and tagged , , , , . Bookmark the permalink.

2 Responses to New Technology Helps Advisors Give the Right Financial Advice

  1. I like that you brought up the concept of trust. Gaining consumer trust in financial advising will be played on a new field. Trust is a complex psychological state continuously shaped by how consumers feel and think.

    Trust between consumers and financial advisors has two critical elements (1) the willingness of the consumer to be vulnerable and (2) the positive expectations the consumer has of the advisor. These elements have been substantially damaged over the past five years. In addition, over that time period, the highly trusted information technology and consumer electronics industries have reshaped how, when and where consumers receive financial information – data and advice.

    By focusing on the ability/competence of financial advisors and their access to technology, cognitive (thinking/rational) trust may be easier to regain and build. Real progress in trust development will come when the harder-to- regain emotional trust components are realized such as benevolence and integrity.

  2. Great guest post here. This post really valuable information.

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