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Reimagining Investing


The investing landscape is changing, but the everyday lives of investors and how advice is provided remain largely the same. That’s unsustainable.

By Robert J. Kirk | January 12, 2022

It’s time for a new approach to how we engage with clients: an approach that understands that our clients are busy, under-informed, and overwhelmed by the volume of information available today. Simply put, the internet is the knowledge of good and evil and customers are now actively participating if not driving their own financial planning. They feel empowered because they can access information about any product and plan within seconds. However, this is a false hope at best because access to information does not mean understanding, nor does it mean that it's suitable for their specific situation.

The future of investing isn’t going to be about doing more with what we have, that's process optimization. It’s going to be about reimagining the entire methodology for working with clients. In my humble opinion, it won't be the large predator that eats smaller ones, but rather the fastest ones eating the slower prey. To survive in this new world, every aspect of the advisor-client relationship must be questioned. What new services do investors want? How do those services get provided? What new tools do investors need to properly navigate their financial lives? What will drive growth in this market? And how can we make sure our clients continue to trust advice providers with the responsibility for managing their hard-earned money?

These questions are not only relevant to today's incumbents (banks, financial services, insurance companies) but also to challenger firms (Apple, Google, Amazon, fintech startups) that will soon answer them—and meet tomorrow's needs—to remain competitive participants in the wealth management industry. The key to this, and the underpinning of any firm’s innovation strategy, needs to be reimagining the advice process from beginning to end. Why keep asking the same questions and following the same processes that everyone else does - is that your future of investing? Implementing an integrated system of portfolio construction across all customer segments that is agile, smart, and simple will be a major component in delivering on these goals. The power of data is enhanced by innovative tools that can tap into a client's life and help you better understand their specific situation. Whether they are a single parent, an established couple, an empty-nester, or approaching retirement, you have to think about all of the Life Events that could impact their financial journey.

Competitively, this means that you need to develop new ways for clients to learn about and engage with you at moments in their financial lives when they need it most: before life changes (i.e., marriage or children), or specific trigger events (i.e., anniversaries). If you are only monitoring for these events and acting on them after the fact, then you are too late. For example, my bank just sent me a "Benefits of Refinancing" letter (snail mail) that arrived after I had already sold my house and paid off my mortgage. Hmmmm ... great job!

Put simply: We need to think differently about how clients invest with providers —and deliver advice to them differently, too.

So, what does the next generation look like? Let me give you a glimpse of one possibility.

Imagine a customer, Alicia, who is in her mid-thirties and has been investing with a provider for some time. All of her information—including existing accounts, net worth goals, budgeting categories, and future plans— are already available at the firm. She is contemplating having a child and is concerned about the expense's that she would incur and how that would impact their family going forward. In the old world, her advisor would wait until her annual review to ask her about any changes in her life plans. But if the client did not mention the idea for a child, the advisor might not even bring it up, thinking that the woman was childless in her mid-thirties and assume that she didn’t want children. In the new technology-driven world, a system based on artificial intelligence and machine learning would be crunching data on every client and every interaction they have with the firm and the outside world. The advisor would be notified that there are a number of female clients in their thirties that might be thinking of becoming first time parents since this percentage has more than quadrupled since the 1970’s.

These questions would be added to the client’s meeting prep and the advisor would ask the right question and discover the client’s plans and also be provided with suggestions on how to plan for the family addition.

These insights drive interactions with members of our advisory team who help customers like Alicia meet their financial goals through a process that is customized—and facilitated digitally—to each individual situation, from first-time buyers and young families to retirees and highly affluent clients. Banks will have many opportunities as the industry evolves for personalizing these engagements based on consumers’ stage in life or current challenge…the possibilities are endless.

Technology will play a key role in all of this. It will be the enabler that lets us make investing more intelligent—in essence by “thinking differently” about how we present information to customers to engage them across every stage of their financial journey.

Technology can also help personalize the client experience in back-end processes that support the front-office and improve efficiency within operations. From client interactions with advisors during account opening all the way through to supporting trade execution, we must reinvent how these experiences are delivered to yield relevancy, education, and on-time delivery…and ultimately to drive results.

Our challenge is not just in imagining what it looks like but also reimagining everything.