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How Increasing Financial Planning Automation Is Leading to More Values-based Advice
• Bill Bachrach • January 27, 2021
In 2020, InvestmentNews reported that advisors embraced tech tools in surges not seen before and financial planning has become the new growth model for firms.
To me, this news wasn’t surprising—at all. As a keynote speaker and advisor success trainer, I have been preaching that truly comprehensive financial planning is a triple win: great for the clients, great for advisors to grow their businesses, and great for companies to increase recurring revenue, client loyalty, and advisor retention.
In fact, the alignment of growth in technology adoption with growth in financial planning makes perfect sense as the automation of financial planning enables advisors to execute on more values-based advice.
The future growth into values-based advice is really all about implementation. The mantra for a lot of companies these days is ‘adoption is the new innovation.’ It’s pretty much impossible for an advisor or firm to have a technology advantage for very long, if at all. Therefore, the key to success is to implement better than the competition.
The Value of Values-based Advice
The premise of Values-Based Financial Planning is that in order to help people make smart choices about their money it helps to understand their values—what’s important… to them.
But identifying a person’s core values can be tricky, especially if you aren’t trained to have these emotional and trust-fueled conversations. People skills are another competitive advantage.
An effective values conversation can be compared to Maslow’s hierarchy. The operative question to get a values conversation started is, “What’s important about money… to you?” Lower values tend to be more about survival: paying the bills, having security, enjoying some freedom, for example. While mid-level values are usually about helping others (taking care of my family), and making a difference (helping my community) to leave the world a better place. And then higher values are more like self-actualization; such as personal fulfillment, satisfaction, peace of mind, and happiness.
In this sequence there is a human and emotional connection to retrieve that answer, empathize, and make a strong personal connection with each spouse or life partner. This cannot be replicated by a machine. Where technology then plays such an important role is in helping advisors deliver on the promise of goal achievement AND values fulfillment.
Comprehensive Data Insights
If you want to help people make smart choices about their money you need information—a lot of it. You can streamline the data collection process with a form you request clients fill out with their fiscal details. But if the process of then manually transferring client data across financial plans, performance reporting, and CRMs sounds error-prone, that’s because it is.
With life moving beyond paper statements and static plans, there are now ways for clients to see their financial data collectively and conceptually like never before. Your clients want a financial plan that supports their most closely held values, and it’s up to you to aggregate their account information in an accurate and non-disruptive way. Clients want the outcome of having all of their financial affairs organized, but they don’t want to personally have to do the work to get it there. That’s your job.
Technology that allows data collection workflows, account integration, and data analytics helps advisors create that single portal, or ‘big picture’ view of a client’s total financial life. The result for the client is massive simplification… which, you guessed it, allows them to do more important things with their time and their life that are aligned with their values… what’s really important… to them.
Your Central Operating System
There is an element to providing advice that revolves around organization and accountability. You can choose to take on that role of data updater, monitor, scheduler, etc., or you use your time elsewhere—like strengthening your client relationships—and leave the simple, replicable tasks to technology.
Think of how a system that triggers tasks, reminders, and automated follow-up, or even automated advice execution with data driven from the client’s account, can offer additional time for values-based financial planning and maintaining a strong, high-trust relationship with your clients.
Planning software today can offer you the ultimate centralized organizational tool. With financial planning technology, you can offer continuous monitoring with proactive planning notifications, allowing you regular opportunities for human interaction with your clients.
Having a comprehensive system to rely on is a value-add for your business and for your clients’ future plans, goal achievement, and values fulfillment.
Moving Beyond Just the Financials
This shift to values-based advice is rooted in finding out what people inherently value. Not surprisingly, in my conversations I have found we value health more than money. And yet, most financial professionals tend to not really think about their client’s health or incorporate that into the plan. Understandably, many advisors wonder, ‘What’s the role of the financial advisor to coach or advise their clients to take better care of their health?’
Well, if you are spending less time on data entry and financial account aggregation, you can account for other areas of their life—not just their financial life—as part of that ‘big picture’ view. I think that’s where the future is going.
We know that health and longevity are closely tied, and longevity is an integral piece of a client’s financial plan. With the capabilities of client sites and portals as a gateway for not only client engagement, but engagement with areas of the rest of their life, there is no reason not to move a step further and make sure their health, legal, and tax affairs are all accounted for in the plan. Incorporating these elements will only help you ascend to truly being your client’s trusted values-based advisor.
The Evolution of Advice
As more and more financial professionals embrace technology into their business, they should be confident—not fearful—for the place technology has in their financial planning practice, as automation simply allows more time to focus on activities that add value. To learn more about evolution of values-based advice, read the eBook “Power to the Plan: The (R)evolution of Financial Advice.”
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