Before I get started, I should do you the justice of letting you know that this is a three-part blog post. So if you’re one of my more eager followers, you’ll have to wait until the next posts for the continuation. Now I’m starting to wish that my favourite serial TV shows would’ve given me that warning before forcing me into an overnight binge-watch on Netflix (more on Netflix later).

It’s no secret that the average financial advisor is approaching retirement, with most being in their mid-50s. Also consider that customers are in a similar demographic shift, with an estimated $30 trillion in assets shifting from baby boomers to their heirs over the next few decades. Certainly both facts pose a whole slew of problems to our industry like how to retain clients’ assets, establish relationships with a new demography, and recruit top talent from a diminishing pool.

But, I think the more strategic questions firms should be asking are about how market expectations and customer engagement needs are changing. If customers are going to be younger and advisors are going to be younger, the customer-advisor relationship is fundamentally changing. In the “Age of the Customer,” and amidst a “Digital Revolution” that focuses on self-directed user experiences, what is the new customer journey?

Let’s start by looking at flaws in the existing “inside-out” paradigm. The FA finds a lead, qualifies the prospect, generates an investment plan, wins the business, and then sits down with the customer to fill out all the paperwork to onboard them and open the accounts. Business is driven from inside to out, meaning the FA is responsible for initiating all activity and flow of information. The problems are easy to see for the Apple, Google, Netflix, and Uber users of today. Customers expect to pull information and seek service at their leisure, and seek more control over the “journey” and steps involved.

To add insult to injury, the actual onboarding itself is a nightmare. Over the years, we went from just a simple “New Account Application” form, to adding tax forms, a “Know Your Client” form, some “Anti-Money Laundering” checks, and an increasing stack of regulatory-demanded paper. For the most part, the aging customer and the aging advisor see these as incremental add-ons triggered by relatable world events, and it’s just become understood as the norm.

For the younger demographic (both the customer and the advisor), the amount of back-and-forth paperwork is a huge pain. For customers, that makes a less sophisticated robo-advisor platform seem like more and more of an enticing alternative. Besides the economy-of-scale reduction in fees, convenience of service is a top reason why investors choose robos over human advisors. In this case, customer engagement needs are so important that consumers are willing to sacrifice quality of product or service if it means better customer engagement.

There’s a reason why Blockbuster went out of business when Netflix came into town even though Blockbuster still had the larger selection: because Netflix was easier to work with!

So… What should the new normal be? As a (relatively) young, tech-savvy investor who also works with FAs all the time, I can tell you that it should look very different than what I just described. The key is to think “outside-in”, which is to let customers direct their journey.

The magic keys to successfully mastering omni-channel digital customer engagement are to:

  • make each interaction painless and productive for both the customer and the advisor,
  • let customers interact with you when, where, and how they want,
  • connect the dots of each interaction to understand the journey across channels, and
  • direct customers toward a destination using insight-producing analytics.

In my next post, I’ll go through these strategies in detail with some examples, and then we’ll get to how to implement those strategies. If you like what you’re reading (or even if you don’t), please leave me a comment below and let me know your thoughts.