Banking

Advisors Discover Exciting New Technologies, Financial Planning Tools In A Turbulent Year

For old-school advisors with limited enthusiasm for technology, 2020 forced them to rethink their resistance. Tech-savvy early adopters, by contrast, feasted on the ever-growing menu of online applications, financial planning tools and digital resources.




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Almost all advisors found that the pandemic accelerated their push to embrace automation. Whether they did so eagerly or reluctantly, the challenge was finding cost-effective solutions that were easy to learn. They wanted financial planning tools that could integrate with their existing processes and systems.

“It’s almost overwhelming how many technology tools are out there,” said Nathan Parkins, a Chicago-based advisor. Since he launched his firm in January 2020, he estimates that he sampled more than 50 software demos.

Advisors Put New Tech Tools To Work

Popular tech products became even more omnipresent in 2020. Customer relationship management (CRM) platforms were already a vital part of most advisors’ practices. They helped them organize client data, manage tasks and customize their communications. In the pandemic, they’ve proved critical to practice management. Well-known integration tools such as Zapier, which automates workflows and connects a range of web-based applications to each other, were crucial.

But 2020 also led advisors to make some dazzling discoveries of technologies that proved invaluable during a difficult year.

For Parkins, a favorite find was FP Alpha, a financial planning tool that harnesses artificial intelligence (AI) to guide advisors as they work with clients.

“It reviews a client’s situation and pulls in all the information about their taxes, insurance, investments and other stuff,” he said. “Then it makes recommendations. It’s a security blanket for us. We don’t have to do a ton of extra research” when offering specific advice. If a client works as a sole proprietor, for example, FP Alpha might prompt Parkins to check eligibility for the qualified business income deduction when discussing tax planning.

Using AI To Run A More Efficient Business

When Parkins evaluates any technology for his practice, he focuses on three criteria. Those three are: whether it will integrate with his CRM, how it will enhance client experience and to what extent it improves his business operation. He says it’s rare to find something that checks all the boxes.

“Even if there’s one thing about it I love, there might be one or two things it lacks,” he said. “It becomes a question of what am I sacrificing” to get its benefit.

While FP Alpha leverages AI to prompt advisors to make timely client recommendations, other products use AI to boost internal efficiency. They free planners to interact with clients rather than engage in tedious administrative tasks.

Manny Henson, a certified financial planner in Towson, Md., calls X.ai a game-changer in helping him run a tight ship. He discovered it in the summer of 2020 and signed up for its $15-a-month plan.

Financial Planning Tools For Time Management And Tax Management

The software doubles as a digital receptionist and schedules appointments with clients. He estimates that he has saved about 60 hours of time over the last eight months by relying on X.ai to book meetings.

“I can also use it to screen my emails and communicate with multiple guests to find a meeting time without my involvement,” he said.

Independent fee-only advisors often struggle to set prices that accurately reflect the work they perform for clients. It’s tricky to determine which activities sap the most time or generate the most revenue.

In October, Henson started using Toggl, a free time-tracking app that helps him allocate the number of hours he needs to devote to various client services.

“It gives me a better idea of how I spend my time,” he said. “Before Toggl, I’d estimate how much time I was spending on tax, estate and insurance planning to get an idea if I was including the right pricing.”

Trend Toward Customizing Client Portfolios

For advisors who offer asset management along with financial planning, the trend toward customizing portfolios to fit client needs continues to gain steam. But it takes time and effort to tailor portfolios for investors with wide-ranging preferences and priorities.

Mike Silane, an advisor in Irvine, Calif., has recently started using Astro, a portfolio optimizer that lets him do direct indexing. Astro allows him to assemble a basket of stocks designed to meet or beat the performance of an established index such as the S&P 500. As a result, he can accommodate high-net-worth clients who want a customized index that includes tax management features. (Astro is part of Orion Advisor Technology’s trading and rebalancing platform.)

“Astro will propose trades to meet a client’s specifications and it measures tracking error by portfolio,” Silane said. “It also helps with rebalancing. It might suggest we sell a (down) stock for capital losses to offset future capital gains, without violating the goal of producing index-like results.”

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