The Visual Client: Using Advisor Tech to Adapt to Changing Client Preferences

The Visual Client
Using Advisor Tech to Adapt to Changing Client Preferences

Executive Summary

•The financial services industry is perpetually in a state of disruptions. Advisors today face numerous competitive threats. The key to surviving and thriving is to identify and adapt to the drivers of change quickly. This paper provides a straight forward blueprint to help advisors accomplish that goal.

•Shaped by the Information Age, consumers today tend to be vastly more sophisticated about personal finance than previous generations. To adapt, FAs should recognize and conform to consumer interest in being educated and actively involved in the planning process. Clients no longer are content to merely be presented a book length, computer generated financial plan.

•The universal adoption of smartphones has made consumers increasingly visual and causing them to have shorter attention spans. This should have a profound impact on FA website design.

•Website design is a critical element of financial advisor success. Elements of sound design include minimal text, unique and relevant images and (short) video clips, and the inclusion of client facing software presented with compelling calls to action.

•There are two types of client-facing software – apps that serve to educate and engage clients and prospects and relationship software that offers free valuable services designed to make the advisor-client relationship stickier.

•Financial advisors would do well to enlist a website design firm that specifically caters to independent financial advisors.

Introduction

Much has been made about how technology and app development in the 21st century have been disrupting virtually every industry. The financial services industry is certainly no exception1. However, one aspect of our business that is perhaps a bit different from other industries is that financial services has perpetually been in a state of disruption. Since I entered the industry in the late 1980s, the industry has seen wirehouse consolidation, the emergence of DIY trading platforms, the proliferation of mutual fund companies (followed by the proliferation of share classes), the rise of index funds along with the popularization of ETFs, the exodus from commission-based wirehouse brokerage complexes to independent, fee-based RIAs, the shift from transactional investment management to comprehensive financial planning, the introduction of automated (robo-advisor) trading platforms, and, most recently, the introduction of AI-driven apps that are explicitly intended to replace the traditional human financial planner. Throughout my 30+ years in the industry (and, I suspect, long before I came along) change has been the only constant. Over this time, many disruptors have presented themselves existential threats to the livelihoods of financial advisors. However, through it all, we advisors have proved to be remarkably resilient and demand for real human financial advisors has never truly waned. For advisors, the mantra for career longevity has always been “adapt or perish,” and a key to actually thriving in the face of disruption has been to identify and adapt to the drivers of change as quickly as possible. The purpose of this discussion is to help raise advisor awareness of the factors that are reshaping consumer investment and planning behavior today and to identify adaptive solutions.

The Drivers of Change in Client Behavior and Preferences

There are two major innovations in the 21st century that have had a direct and lasting impact on how nearly all people in the developed world interact and receive information. The first is the rise of the Information Age, which has been driven by ever more sophisticated search engine algorithms and exponential advances in network speeds. When I was growing up, Encyclopedia Britannica was the closest thing we had to a centralized knowledge repository. Today, the answer to almost any question is just a few keystrokes and few milliseconds away. What that means for our profession is that the informational asymmetries that existed between advisors and clients in past generations are vastly diminished. For example, my 19-year old kid has Acorns on his iPhone. The Acorns ETF model is in his Roth IRA that is funded from roundups on his credit card and from automatic monthly fund transfers from his Ally Bank account. His level of sophistication about personal finance and efficient portfolio construction is undeniably vastly superior to what mine was at 19. To illustrate this further, last week, I wanted to become more familiar with M1 Finance, a rising star in the automated online investment platform space. After reading a few enlightening reviews, I then checked out a couple of deep-dive YouTube videos produced by DIY bloggers. Within the span of 15-20 minutes, I understood everything I needed to know about the app’s disruption engine, its limitations, and its business model. Our clients are learning about personal finance (and everything else) in exactly the same way.

The second major behavior-shaping innovation of the new century, is, of course, the smart phone. First introduced in the mid-2000s, by 2019 one would likely be hard-pressed to find a person in the U.S. between the ages of 4 and 94 who does not have an iPhone or android device within arms-length virtually every waking minute of the day. Small screen-sizes and a constant stream of headlines have placed the printed word at a decided disadvantage to images and video content. A growing body of neurological research is finding that our heavy reliance on the devices is actually changing the way our brains are wired and that this “re-wiring” is having a profound impact on the way we absorb information and interact with each other.2 Among the key behavioral shifts that advisors would do well to keep in mind are that consumers are becoming increasingly visual and have shorter attention spans.

Social media is another new century innovation that has had a profound impact on how people interact with each other. However, I mention this only so that readers know I have not overlooked the phenomenon. While there is no shortage of social media marketing firms eager to design and implement strategies for financial advisors, my sense is that many industry thought leaders3 are beginning to question whether having an active presence on Facebook, Twitter, Instagram, etc. is either necessary or worthwhile. My impression is that having a strong, active presence on LinkedIn may still be regarded as essential and that self-produced social media content, such as blogs, vlogs and/or podcasts, is still valuable, but that traditional social media marketing is not effective for helping most financial advisors attract and retain clients or for building brand awareness.

The Solutions – How to Adapt to the New Planning Environment

Since we have identified the primary drivers of change in consumer behavior, the next logical questions are, “What concrete steps can advisors take to adapt to increasingly visual clients with shorter attention spans?” and “How can advisors adjust their business models and their value propositions to thrive in the wake of diminished informational asymmetries?” Broadly speaking, there are two simple, yet effective, solutions. The first is to create a sophisticated, dynamic website. As industry thought leader Michael Kitces declared in a recent Nerd’s Eye View post, “…the reality is that the only non-negotiable virtual presence that every advisor must have is a modern, professional-looking website (not a social media account).”

As the co-founder of a software company that caters to independent financial advisors, I have the opportunity to review hundreds of financial advisor websites. Because our subscribers’ satisfaction with our products is tied to both the quality of the advisor’s website and how our software is presented on the site, I also routinely consult with professional user experience (UX) consultants for guidance on how to help our subscribers improve their website design. To illustrate the importance of this to our business model, last year we had a subscriber cancel his subscription because, over the entire year, our apps did not generate a single new lead for him. When I reviewed the advisor’s website, I discovered that he had never incorporated the apps into his website! Obviously, if no one knows you have the software, it will not generate any leads. This was a wake-up call to us that advisors need to be better educated about website design.

To be perfectly blunt, the vast majority of financial advisor websites I review are poorly designed and apply archaic, static, web-design concepts. To borrow another quote from Michael Kitces, “…in a world where consumers are far savvier and more informed than they have ever been, the one thing you can count on is that a prospective client will have done their due diligence on you before they decide to book a first meeting and there’s no better way to throw ice water on a warm prospect than an outdated website…or one that prominently features a sailboat, lighthouse, or long winding road tapering off towards the horizon, that doesn’t really connect with prospects today.” To Mr. Kitces’ point, UX research has consistently shown that new visitors to a website form make the decision to stay or move on in just 5 seconds4.

Fortunately, there are a number of simple principles you can apply to improve your online presence. First and foremost among these is to make your website as visually captivating as possible. This means minimizing text and incorporating compelling images and video. As Kitces notes, generic stock images are first impression-killers too. Images should feature you, your staff, your office, or anything that is unique to your practice. Consistent with the trend toward shorter consumer attention spans, video clips should probably be no longer than a minute and should convey something unique and compelling about you or your practice. As advisor coach, Dan Solin notes in a recent article, “The average viewer remembers 95% of a video message, but only 10% of a printed one.” Solin also recommends ditching traditional home page menu titles such as “home”, “About Us”, “Services,” etc. in favor or headings that break the mold and set you apart. Similarly, many website design firms encourage advisors to create vertically scrolling websites. The reason for this is that site analytics consistently shows that the vast majority website visitors will not visit another page.

Another important website design concept is to make the site dynamic an interactive. This may include incorporating rotating images and/or tag lines to capture visitor attention, but it also involves periodically posting and updating website content to help with search engine ranking. While the efficacy of search engine optimization in financial advisory practices is a controversial topic, it is a fact that static websites tend to rank far lower in organic searches than websites that regularly update content. Blogs, Vlogs, and Podcasts can be great client engagement tools that also help may your website dynamic.

Beyond these basic web-design tips, the second, more avant-garde solution to adapting to the new advisor-client paradigm is to incorporate client-facing software into your website to engage and educate prospects and clients and to help make your client relationships stickier. Ideally, the apps should be presented with compelling calls-to-action (CTAs)5. Among the simplest and most common examples is a CTA to “Book an Appointment” that links to the advisor’s scheduling app. CTAs that invite visitors to subscribe to your newsletter or blog are also easy attention-grabbers.

A more sophisticated and more powerful application of this concept is to embed client-facing planning software into the FA website. There are two basic types of client facing software – apps that are designed to engage and educate users and apps that offer a useful free service. Popular software maker Riskalyze was a pioneer on this front, as its “What’s your risk number?” CTA presents a compelling invitation for clients to stay on the website and become educated about portfolio risk. We take a similar approach with Nest Egg Guru’s college and retirement planning app suites with CTAs, such as, “If things go badly in the markets, will you still be okay?”, “Are you on track for a secure retirement?”, “How long will your retirement nest egg last?” Retirement and education planning are among the most important financial planning objectives for American families and the inclusion of website applications that provide useful educational insight both helps differentiate you from other advisors and endear site visitors to your practice.

The use of client-facing service software to strengthen the customer bond is best exemplified by the commercial banking industry. By offering free applications, such as online bill payment and automatic deposits and withdrawals, banks have found that they can dramatically increase client retention. Using myself as an example, I have had an account with an online bank that has provided dreadfully bad customer service for years but have not closed my account because of the enormous hassle of terminating and reestablishing multiple automated deposits and withdrawals. From a more positive perspective, Nest Egg Guru is planning the rollout of individual service apps that offer the FA’s clients free, secure password management and document storage. Obviously, if your clients are storing their passwords and documents through your website, it will tend to make your relationship with them stickier.

As a final tip for incorporating client-facing software into your website, all advisors should understand that it is always best to have your website designer embed the apps’ HTML codes into your website rather than linking your CTAs to the apps via hyperlink. The reason or this is that on of the key factors in search engine ranking is how long site visitors stay on your site. While website apps are a great tool for keeping site visitors engaged, when you use a hyperlink, your site visitors actually leave your website and run the apps for the app-maker’s site. If you use the embed code instead, the applications run on your website.

Conclusion

In sum, the purpose of this discussion has been to provide tangible ideas to help you adapt and thrive in the modern financial planning ecosystem. While the independent financial advisor space will always be extremely competitive and is constantly being disrupted, I hope this exercise has demonstrated that there are many relatively easy ways to help you differentiate your practice and that website design is a critical element of your future professional survival and success.

The idea of incorporating client-facing software into your website is probably the most novel concept introduced in this article. It can truly be a powerful differentiation tool. The use of CTAs to grab visitor attention and the apps themselves serve to hold visitors on your website and can go a long way toward enhancing your Internet visibility. Further, the inclusion of client engagement/education apps and client relationship/service apps should help make your website a hub for clients to return to over and over again.

One question I routinely get from financial advisors is whether Nest Egg Guru’s client-facing apps replace the need for traditional back-end (advisor-facing) planning software. The short answer is, “No, our planning apps are intended complement rather than replace comprehensive planning software.” Most client facing apps are intended to be run iteratively to help clients the see and quantify the impact of changing different variables that are within their control. In contrast, most backend-software provides a higher-level, more sophisticated analysis that is typically presented in the form of a long report. The problem with back-end software as a stand-alone solution, however, is that today’s clients generally will not read these reports after they leave your office. By pairing client-facing planning software with deep-dive backend planning software, you fulfill the modern client’s desire to be educated and actively engaged in the planning process while demonstrating that you still offer a level of guidance and sophistication that goes beyond what they will be able to glean from any DIY YouTube video.

One last suggestion for readers who wish to incorporate this guidance is to enlist the services of one of a website design firm that focuses specifically on financial advisors. These firms generally have a clear understanding of the unique aspects of our industry and of compliance considerations. Importantly, they will also make sure your website is properly formatted for access from mobile devices. Major players in this space include (in alphabetical order) Advisor Products, Advisor Websites, FMG Suite/Advisor Launchpad, and twenty over ten.

Thank you for reading. Best wishes for continued success.

J.R. Robinson is a co-founder of financial advisor software maker, Nest Egg Guru, and is the owner/founder of Honolulu-based Financial Planning Hawaii.

Endnotes

Why advisors must adapt to a new investor. (Financial Planning 3-April-2019)1

Can’t put down the phone? How smartphones are changing our brains – and lives. (NBCNews.com, 14-Dec-2018)2

Does Social Media Really Matter for Financial Advisors? (Michael Kitces/Nerd’s Eye View, 28-March-2019)3

Does your website pass the 5 second test? (twenty over ten blog, 4-Feb-2019)4

The Importance of Calls to Action For Financial Advisors (twenty over ten blog, 20-Feb-2019)5