The survival of advice will depend on digital partnerships

Alex Burke,  Senior Writer,  No More Practice Education

According to global research from Israeli firm Axell, COVID-19 has rapidly accelerated a new paradigm in financial advice whereby businesses will be increasingly delineated based on their customer engagement abilities.

The report, Human Touch in a Digital World, notes that to date "the focus of incumbent investment has been on solutions to improve adviser communications and transactions, such as improved application forms and policy administration systems." Prior to the pandemic, innovation and investment in the "interactions of advisers with end-customers" took a backseat.

From now on, though, neglecting the customer experience - at least insofar as it concerns digital engagement - could be a costly mistake. The research cites EY's 2019 Global Wealth report, noting that a third of all customers had switched advisers in the previous three years, while another third were planning to switch over the next three.

"Research highlights Gen Y and Millennials are happy to switch providers for a more competitive deal," Axell's report continues. "Therefore, advisers and incumbents need to urgently prioritise new ways to engage and build loyalty with younger generations to ensure industry sustainability."

So how do you build loyalty? According to the report, it starts with data. Using customer data to create "personalised content and predictive offers," the report says, is the "most effective way for maximising returns."

Regarding sourcing new customers, the report recommends ample use of social media marketing: "[It's] especially powerful for financial advisers in amplifying word-of-mouth referrals - an acquisition channel that remains a primary source of new business today.

"By leveraging social media platforms, advice businesses can transfer the referral process online, capturing leads and enabling efficient follow-up processes by harnessing data and insights."

Adopting new technologies has benefits in terms of business efficiencies, too. In 2020, Australian advisers said "advicetech" would impact parts of the industry including preparing the initial financial plan (63.8%), managing regulatory compliance (50%), client communications (50%) and investment execution (50%).

Of course, with any investment in new technology, there are inherent risks, especially those involving customer data. In our new series, After Hours, we explore the best practices and biggest risks involved in embracing tech to improve customer experiences.

You can watch the full series (and complete the CPD course) here.


The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here

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