The world’s rich are getting even richer.
According to a recent report from the Federal Reserve, the top 1 percent of earners in the United States now possess 38.6 percent of the country’s total wealth, up significantly from 36.3 percent in 2013.
Converting these high-net-worth and ultra-high-net-worth individuals into clients is a financial advisor’s dream come true considering the boost they can add to any advisory practice’s bottom line. With more assets, however, comes more responsibility; advisors must implement the right financial technology offering to serve this demographic effectively and holistically.
There is a common misconception that high-net-worth individuals are technology averse, at least compared to their younger, less wealthy counterparts that have warmed up quickly to low-cost robo-advice offerings. There is plenty of room, however, for technology to play a massive role in the management of high-net-worth client assets, and these individuals are much more open to using online tools than you might think. Advisors just need to know which tools to implement and how to properly utilize them.
Here are a few areas where financial technology can add value to any financial advisor’s relationship with a high-net-worth client:
Organizing A More Complex Financial Situation
High-net-worth investors come with more qualified accounts than your typical client with a 401(k) or IRA. These individuals also usually have stock options, various sources of income to monitor, and more sophisticated cash flow planning needs. Altogether, this information can be difficult to consolidate and maintain without the right financial planning technology. This comes in conjunction with the need to build financial models and make adjustments to the client’s complex plan, which can take large amounts of time out of an advisor’s day. On the other hand, a financial planning algorithm can take care of this process in minutes.
Improve efficiency by reducing the amount of lost data and static spreadsheets that require hours of diligent maintenance. Robust financial planning software can alleviate these headaches and empower advisors with the time they need to focus on building the best financial plan possible.
Collaborating And Responding To Volatility And Regulatory Changes In Real Time
When the market experiences a downturn or new regulations develop, high-net-worth investors expect more from their advisors than a simple phone call. They want their advisor to respond with recommendations for their financial plan—and fast.
Advisors with sophisticated financial planning software can work collaboratively with their client to not only demonstrate any impacts in real time but also quickly make new recommendations or adjustments. Technology can enable both parties to view current market changes, as well as forecast their ramifications decades into the future. Possessing the ability to alter a financial plan in a flexible, dynamic manner can go a long way in easing the client’s fears and building trust.
Estate Planning With Confidence And Clarity
For a high-net-worth client, transferring wealth to their heirs is a much larger operation considering the complexity and diversity of the assets at hand, as well as the volume of money involved. The right technology stack allows advisors to formulate more sophisticated wealth transfer plans that move certain assets at the appropriate time to avoid excessive taxes and fees. Considering the complexity of the operation, ensuring that the assets and all appropriate documentation organized can help make the transfer a more seamless process.
Additionally, the generation inheriting this wealth is even more technology-hungry than their parents. As an advisor, demonstrating your dexterity by adopting technological solutions to meet their needs will go a long way in courting them to eventually become clients at your practice as well.
High-net-worth prospects are eager for a high-tech relationship with their financial advisors. Not only will the right financial planning software add value to the client experience, it will save advisors hours of time clearing out filing cabinets and manually entering data points into spreadsheets. If you want to tap into this goldmine, partner with the right technology provider to ensure you can handle the extra workload and provide these investors with the level of service they demand.
Ken Lotocki is the product director at Advicent, a provider of SaaS technology solutions for the financial services industry, based in Milwaukee, Wis. For more information, visit their website at www.advicent.com.
