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The Surprising Ways Technology Will Affect the Generational Wealth Transfer

By team practifi

While the present transfer of wealth from older wealth holders to their heirs is hardly the first movement of its kind, some new details have financial advisors paying attention. For instance, there’s the sheer amount of money moving on from baby boomers — $70 trillion over the next two decades. Another defining factor of the ongoing process is the role technology will play in that transfer. 

Technology and Finance: Inseparable

Tech is a complex subject in wealth management and beyond because it encompasses so many concepts at once. Everyone with a smartphone has access to more powerful technology tools than were available in the 1980s. Telecommuting employees carry out their whole workdays virtually. Shopping, travel booking, day-to-day banking: all of these have gone online. Accordingly, technology will have a huge impact on financial advisors’ jobs from here on out. 

Determining exactly what that impact will look like is key to thriving in the wealth transfer. The investors inheriting money today have grown up with technology all around them. Financial advisory firms will have to look hard at their use of digital tools to ensure they’re ready to give these young wealth owners the best possible experience. 

The first thing savvy financial advisors will notice is that technology is changing their business in a few distinct ways. Some relevant tech tools are aimed at their clients, while others are strictly designed for in-house use. Mastering both sides of the technological coin is a good way for advisory firms to keep up with a changing landscape.

Client-Facing Technology 

The impact of consumer technology may surprise some financial advisors. It’s easy to assume that with access to unlimited information and self-service applications, investors may not want to take in-person meetings with their wealth managers at all. 

The assumption that robots are coming to wipe out the financial advisory field has not proven true so far. Wealth management is about managing significant amounts of money and seeking to make careful investments that will maximize the value of those resources. These aren’t the kinds of decisions that people want to make without input from a real meeting with an advisor. 

Wealth management firms looking to take a “best of both worlds” approach to today’s investment landscape can offer a hybrid type of client-facing technology. They can offer applications that allow users to take the initiative to plan out investments but require intervention from financial advisors to finalize the transactions. 

Financial advisors that want to become more attuned to modern investment models can restructure their services around a more client-led style, especially when dealing with smaller accounts. A valid approach is actively encouraging wealth owners to research opportunities with tech tools, then stepping in to provide insights. 

Financial advisors taking this tech-forward, self-service path can consider switching to a fee-for-service payment model rather than charging based on account performance. This can be the perfect middle ground for a client who wants to be more independent but isn’t comfortable turning the whole investment process over to a robo-advisor.

Internal Technology

A financial advisory firm isn’t just defined by the technology it provides to clients. Internal systems that clients never see are also vitally important for modernizing the business. 

While there are numerous reasons to upgrade wealth management technology, two stand out when dealing with a wealth transfer. First, businesses need better data management to understand their young, new clients. Second, firms must update their technology platforms to keep young associates satisfied and engaged. 

Data is considered currency in all industries today — wealth management is no exception. A modern customer relationship management (CRM) platform is an essential repository of updated client records — and more. 

A capable CRM designed for the financial industry will be able to unite data from disparate systems through smooth integration with other tech tools. Its purpose-built workflows will also save time and effort as advisors build more effective strategies around their clients’ interests and needs. 

These types of modern tech tools make it easier for advisors to provide excellent service, and they’re also absolutely vital from an internal quality-of-life perspective. No one at an advisory firm wants to waste time using physical filing cabinets or outdated, disconnected software throughout the day. 

Young advisors who have become accustomed to using technology in their personal and professional lives may be especially unhappy operating in low-tech work environments. Firms should be highly conscious of what the best young employees want and need. Retaining these rising professionals can be critical to connecting with the next generation of wealth owners.

A Tech-Infused Future

The financial advisory firms best equipped to succeed during a generational wealth transfer are those with an eye on the future. Inevitably, technology will play a heavy part in preparing for what’s next. 

Going forward, will young investors want to work with firms that aren’t tech-savvy? It’s unlikely, especially because businesses held back by weak, outdated technology will see their customer service and efficiency suffer. 

Just as the baby boomer generation is handing down money to the next generation, legacy wealth managers will need to pass on their account knowledge, helping their firms connect with heirs. This knowledge transfer should be carried out with the aid of technology, namely a strong and integrated tech environment with an industry-focused CRM serving as the hub. 

Financial advisory firms that are forward-looking in their strategies and tech investments are in an exciting position during the ongoing generational wealth transfer. The rest of the field will need to catch up if they hope to stay competitive. 

Searching for a CRM powerful enough to guide it through the generational wealth transfer? Look to Practifi, a robust CRM designed specifically for the wealth management industry. Book a demo to learn more. 

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