Client Communication Trends Taking Over the Financial Planning Industry

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The coronavirus pandemic has impacted nearly every facet of the financial planning industry, but the biggest change may be to the way that financial professionals communicate with their prospects and clients.

In March, venture capital firm Sequoia wrote a note to founders about planning for the post-pandemic future. Their guidance was to stay deliberate, but optimistic. To steal their metaphor: When approaching a corner on a racetrack, you hit the brakes as you enter a curve (in this case, the pandemic). But the time to start accelerating is before the curve is over: it’s at the apex of the turn.

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As vaccination rates increase and major companies explore a return to the office for their employees, tech CEOs aren’t the only ones that should start to press on the gas. SmartAsset’s recent research shows that financial advisors, many of whom were caught flat-footed by last March’s forced shift to digital, are eagerly anticipating a return to normal. But their clients and prospects, many of whom have come to appreciate the flexibility of video and asynchronous communication, may be less eager to embrace in-person meetings and office visits.

Forced Disruption

Social distancing mandates and community lockdowns quickly impacted the ways that financial advisors worked with their clients. Research by technology firm Broadridge showed that 77 percent of financial advisors lost business as a result of not having the right technology to interact with their clients. Since then, advisors, as well as the financial services community overall, have largely adapted. According to a survey of financial advisors who use SmartAsset’s SmartAdvisor platform, nearly 50 percent now prefer to use video conferencing to connect with their clients, up from less than 3 percent in the “before times.”

In other words, advisors largely – and rapidly – adapted to changing client and prospect communication needs as a result of external forces. At SmartAsset, we saw a 20 percent increase in the number of prospects who were open to working with an advisor remotely between January 2020 and April 2020.

The swift shift in preferences is a result of investors and consumers adopting video conferencing in order to maintain some sort of normalcy: work, socializing and even exercise classes all moved online. As Microsoft CEO Satya Nadella pointed out in Spring 2020, we saw two years of digital transformation compressed into two months. Most of us were just along for the ride.

Pre-pandemic, while investors conducted some financial transactions online, such as bill payment, most preferred to meet with their financial advisor in-person. The question for advisors now, is whether this will change once we reach herd immunity or another measure of a “return to normal.”

For advisors and other financial professionals focused on attracting the newly wealthy and the emerging upper-middle class, the answer is almost certainly “no.” As younger, digitally native generations inherit wealth and reach their prime earning years, they’re even less likely to embrace older ways of doing things: 53 percent of millennials report that they would seek out a new advisor if their current advisor wasn’t utilizing satisfactory technology.

But even for advisors focused on serving those closer to retirement and beyond, a return to the office for regular client meetings may not be in the cards. According to research from McKinsey & Company, three-quarters of consumers who use a digital channel in place of a physical one for the first time are likely to continue doing so. Once consumers become comfortable with the convenience of digitizing a service, they’re unlikely to expend the time and energy required to go back to in-person interaction.

Culture Clash

While consumers may not be eager to return to the “old” way of doing things, financial professionals are split. In a recent survey of advisors on SmartAsset’s SmartAdvisor platform, one in three financial advisors reported that “video calls” will remain their preferred method of communication even after things return to normal. Pre-pandemic, less than three percent of advisors shared that sentiment.

Additionally, more than 40 percent of advisors surveyed listed in-person meetings as their preferred method of communication with clients post-pandemic. While this is significantly lower than advisors who preferred to meet with clients in-person before the pandemic, it could point to an emerging divide between how advisors and their clients/prospects prefer to communicate.

Obviously, we’re still in the early stages of a full pandemic recovery, so survey responses may not be clearly indicative of how long-term trends will shake out. However, financial professionals would be wise to let their clients take the lead in setting communication preferences and cadences.

Research by YCharts showed that client satisfaction may be dependent on how well advisors’ communication style matches their clients’ preferences. Respondents reported that more frequent and personalized communication with their financial professionals would give them more confidence in their financial plan. But even more importantly, 85 percent of respondents indicated that they would take frequency and style of communication into account when choosing a financial advisor.

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Regardless of how things shake out, matching communication styles with clients and prospects is more than just a question of semantics. Financial professionals who mirror their clients’ and prospects’ preferences as they emerge from the coronavirus pandemic are likely to not only have happier clients, but will be poised to succeed in the long term.


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