The expanding role of technology in financial advice

Joe Duran, CEO of United Capital, sits down with Hollie Fagan, head of BlackRock's RIA business, to talk about what investors are really looking for from financial advice and how technology can help push financial advisors forward.

I recently sat down with Joe Duran, the CEO and founding partner of United Capital, about how financial advisors can serve investors better with some fresh thinking and a little help from technology.

You have worked with so many investors and financial advisors as the founder of a national financial management firm. What are investors looking for when it comes to financial advice?

Duran: Every investor wants to know: Can I live the life that I want? Am I okay? It’s fair to say, everyone wants to live the best life that they can afford, yet you wouldn’t know that from looking at many of the canned, one-size-fits-all financial plans out there. The financial services industry is understandably focused on investing and giving investing advice, but talking about a portfolio that underperforms the S&P 500 often is missing the bigger point. What does that mean to my life and my goals? Can I still retire with enough to live the life that I want?

Ultimately, financial plans go awry when people make the wrong life choices. Some start with bad assumptions and have unrealistic return expectations. Some are overly optimistic or pessimistic about how their lives would unfold. What’s more, most don’t have a dynamic way of course correction. A plan is only good at the time it was written and has to be revisited frequently and on an ongoing basis. An advisor’s job is to help investors understand the impact of their choices on their financial future and make timely adjustments along the way. Advisors exist to provide discipline.

You assert there is a gap in the thinking of what wealth management should be. Tell me about why you think financial advisors should become bionic — to leverage technology to better serve their clients.

Duran: The future is digital and mobile. Location is becoming less important every day. If that’s true for physical products, it is doubly true for services like financial advice. As the advantage of being down the street of where your clients live and work loses its appeal, financial advisors must become boundary-less to be competitive.

More and more, I see financial advice going mobile, collaborative, on demand and 24/7. Not only should such advice be delivered via smartphone, but the process will surely become more interactive and participatory, giving individuals more control than ever.

Describe your ideal digital client experience for us.

Duran: Here is the perfect scenario. A couple in their 50s have planned to retire in their early 60s. But lately work is very tough for the wife, who wants to retire now and take a six-month European vacation. Over dinner the couple talk and decide to find out what needs to be done to make that happen. With her cellphone, the wife makes changes to the couple’s financial plan and sets up a video conference for the next day with their financial advisor.

A revised plan is ready the next day, but the couple is having second thoughts and the husband puts in new changes (shorter vacation, work one more year). Another revised plan is built by the time the couple is on the video call with their financial advisor, who has already reviewed the plan and can recommend adjustments.

The process will be far more dynamic and interactive. We’ll be sitting in the pockets of our clients, in their phones, and ready to answer questions, all day every day.

Do you think this is the direction that the industry is going?

Duran: The world is changing quickly, and convenience, 24/7 accessibility and ease of use have become the top priority. Sometimes it’s not about the product, but the delivery of such product. Why did video stores die? It’s not that people don’t like movies anymore. People preferred the convenience of not having to drive to video stores. Rentals by mail killed the video store, but people don’t even want to walk to their mailbox and would rather stream their movies. For our industry, some companies are so stuck on doing things the way they have in the past — meetings in stuffy conference rooms — but that’s not what consumers want today.

And it’s time to pivot the conversation between financial advisors and investors, from a portfolio’s alpha and beta, back to the all-important question in the beginning: Can I live the life that I want? That’s what will elevate our profession.

Hollie Fagan is the Head of BlackRock’s Registered Investment Advisor business.

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