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Technology helps counselors see the big picture. Advisors must adapt to the needs of young investors. And the wealth transfer tends to come at a difficult time, and there is a lot more advisers can do to help than they realize.

These were the main takeaways from Joseph sweeney, Chairman of the Board and of Wealth, Product and Service Delivery at Ameriprise Financial.

Sweeney – who shared his point of view during a Securities Industry and Financial Markets Association podcast published this week – assessed the evolution of the advisor-client relationship since the 1980s.

Technology played a very minor, if any, role in advising clients when Sweeney began his career in the industry in 1983.

“Financial planning was literally sitting around the kitchen table and was about insurance and investing. It was a business type role, ”Sweeney said.

Fast forward to this century. “The technological advances that exist today allow advisors to focus on a global vision. This eliminates the routine, technical and operational aspects of financial planning and allows advisors to focus on the human aspects of this relationship, ”he said.

Technology has allowed advisors to evolve into much more than they used to be, according to Sweeney, whose responsibilities include Ameriprise’s brokerage, managed products and retail retirement products, among others.

“Today’s financial advisors think about investments, taxes, retirement, estate planning, real estate transactions, benefits and life goals. And understand the hopes, dreams, worries and worries of those customers. It didn’t happen in 1983, ”he said.

The technology is going to be “essential” for advisors to meet the demands of their clients, their evolving roles and effectively operate their practices, according to Sweeney.

Sweeney said Ameriprise spends, on average, more than $ 500 million per year on technology designed to enhance the capabilities of advisors. He did not specify the expenses.

According to Sweeney, the changing investor demographics – with many young people investing for the first time, motivated in part by easy online access – will also make continued technology upgrades a must.

Traditional advisers compete with robo-advisers and brokerage houses that offer zero commissions, which attracts young investors, he noted.

But Sweeney doesn’t expect technology to make advisers obsolete.

“I think, however, that one of the things that won’t change will be the value of the advice of a human advisor. It cannot be replaced. We are humans. And I think we’re always going to want to have that interaction, ”he said. “And, quite frankly, clients want someone who understands their goals and needs. And I think investors benefit greatly from having access to advice focused on their individual needs and goals. “

Indeed, robots and trading apps can be popular, but many investors still want someone to guide them in their investment decisions, according to a report by Charles Schwab. Almost three-quarters, or 71%, of those surveyed said technology is best for simple, more transactional financial tasks, such as tracking expenses, but not for complex needs. And investors are more likely to want to talk to someone when their finances are getting tough, according to Schwab.

“I think we live in a very disturbed landscape. But I think advisers have a golden opportunity to evolve their role by providing not only financial advice but also life advice at the same time, ”he said.

A recent report by E * Trade shows that while Gen Z and Millennials rely heavily on technology for investing, they want financial advice and believe advisors would be the best source for it.

Chairman and CEO of Sifma Ken bentsen, who hosted the podcast, noted that there are industry studies that estimate professional financial advice can add 1.5% to 4% to long-term portfolio returns. And further, “most of this increase will occur during times of heightened market volatility, when advisors step in and help their clients stay the course and keep their long-term goals in view,” he said. declared.

The great transfer of wealth

Meanwhile, Sweeney also spoke about the wealth transfer and estimates that nearly $ 70 trillion will change hands over the next 25 years.

“Engaging with customers and their beneficiaries not only pays dividends for companies that are potentially looking to strengthen their asset retention, but it also improves overall customer satisfaction now,” he said.

Sweeney shared his own experience from the start of the year when his father passed away to show how counselors can do so much more to help their clients or families when someone passes away.

“Obviously, I was saddened by the death of my father. But my sadness turned into disappointment and frustration with the multiple and confusing letters and forms I had to fill out and the apparent chaos that came from several of my father’s financial service providers, including a local bank with which my people were working. parents had been working for over 40 years. years, ”he said.

“And the lack of empathy and the amount of bureaucracy that my sisters and I felt, quite frankly, had a negative impact on some of these brands,” he added.

It was the “calming hand” of his father’s financial adviser, whom he did not name, that made things easier to navigate, he said.

More and more advisers are making it a priority to connect with their clients ‘children to avoid being fired by them when they inherit their parents’ assets. After all, more than 70% of heirs are likely to fire or change advisers after receiving their inheritance, research firm finds Cerulli partners. Strategies for advisors to keep these inherited assets internally include a checklist of key documents related to wealth transfer, discussing topics such as recent changes to retirement and retirement rules. treat their clients’ children like clients from the start.

Do you have a topical tip that you would like to share with FA-IQ? Write to us at [email protected].


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