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Opportunities for Advisors Adopting New Communication Technologies

Industry Trends and Research

While it may be comfortable to rely on tried and true methods of communication, a new study suggests that advisors could do more to effectively reach their target audience. 

Redtail Technology’s AdvisorComms 2019 survey finds that advisors are largely relying on – or limiting their practices to using – the “traditional” methods of communication with their clients, such as in-person meetings and phone calls. 

Polling more than 3,200 financial advisory professionals to better understand industry trends related to client communication, in-person meetings (76%) and phone calls (66%) were ranked highest when it comes to generating engagement from clients.  

The survey also found that nearly 90% of advisory firm employees believe their clients would like to communicate with them via text message, yet 29% of firms have a “no client texting” policy in their office. In addition, 40% of respondents’ broker-dealers have not approved texting as a form of communication with clients. Still, 31% of respondents said they plan to adopt texting as a communications channel within the next year, the findings show.  

Print newsletters (10%), podcasts/radio (3%) and webinars (2.7%) were reported to secure the least amount of engagement from clients. The survey also shows that nearly 60% of respondents are not communicating with clients via video and only 7% are utilizing video to connect with clients on a regular basis.

“Due to the nature of the industry, particularly in terms of its regulation, financial services is often significantly slower than others to embrace new communication technologies,” notes Redtail CEOBrian McLaughlin. He believes that will change, however. “We expect technology like texting and video calls to become more widely used among financial advisors as they experience increasing demand from clients to leverage the technology – and the need to handle growing pressure from fee compression to use their time more efficiently than ever.” 

Customization Challenges

Customizing content for clients was cited as the top challenge by 45% of survey respondents. Other challenges include engaging clients outside of meetings (40%), producing unique (30%) and consistent (28%) content, and client unavailability (28%). 

And even though the technology exists, 22% of respondents do not tailor content to their clients. Of those who do, the survey found that less than 6% consider any client characteristics outside of age, income, gender or education for the purpose of crafting tailored client content. The remaining employees tailor communication based only on age (73%), income (44%) and gender (28%). 

What’s more, nearly half (48%) of firms are not tailoring their communications to prospects and the same amount are not communicating with their clients’ families.

“Both clients and prospects want to feel like they are more than their demographics alone and communications that reflect their advisor is interacting with them as an individual can bolster their confidence in the relationship,” Redtail emphasizes. 

When asked what their communications budget was being spent on this year, the top five budgeted items, accounting for 90% of all respondents, included:  

  • upgrading tools, technologies or processes (33.8%);
  • improving the quality of existing communication assets (26.3%);
  • engaging more on social media (13%);
  • hiring dedicated staff (10.6%); and 
  • launching new communications campaigns (9.4%).

“We anticipate that once advisors start tailoring their communication directly to clients and prospects, they will start seeing a greater return on their investment, especially in terms of utilizing the technology available to them,” McLaughlin emphasizes.   

The survey of 3,200 wealth management employees was conducted in September 2019 and included those with AUM ranging from $100 million to more than $1 billion, with the majority of respondents (87%) working for financial advice firms with 1-15 employees.