As baby boomers retire and begin making plans for succession, their heirs are being brought into the fold. Many are technologically savvy and eager to learn about investing.

Some are already involved in your clients’ financial matters, in which case you may already have good rapport. But many of tomorrow’s affluent will decide the Internet provides the tools to manage assets on their own, albeit often to their own detriment.

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For instance, financial aggregating software like Mint has made it possible for retail clients to combine their online bank accounts together in order to manage their expenses. Mint is aimed squarely at tomorrow’s affluent, while today’s affluent are being targeted by firms like Personal Capital, an American aggregated asset management site which also serves as a registered investment advisor. While Personal Capital is not yet available in Canada, similar services will eventually step in to fill the demand for aggregated asset management.

Financial aggregator software has achieved moderate market penetration (Mint.com has roughly 10 million users worldwide), and most Generation X and Generation Y investors research stocks or potential advisors online.

As a result, prospects may look at your firm’s outdated technology and wonder if you’re able to help them – and your years of experience may not be enough persuasion.

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To catch up, modern software and social media should amplify the value of your advice, rather than silence it. When you present your clients their portfolio performance, find out if they would like to see that information on a tablet. Using the data visualization packages offered by companies like Tableau Software, it is now possible to provide your clients with rich and interactive electronic reporting. A good interactive reporting platform provides the client with more in-depth information, while simultaneously making the material easier to digest.

For example, a well-designed reporting platform could provide clients with the ability to instantly drill down into their accounts from the portfolio level to the trade level, examining their financial data at varying levels of granularity. Additionally, several companies are developing tools to allow clients to see what their portfolios would look like under hypothetical market trajectories.

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Managers can even personalize these electronic reports towards their clients’ individual interests, such as comparing their portfolio performance to customized benchmarks (e.g. a basket of mutual funds). If the client has indicated that they are focused on the big picture, their report could be set up to preferentially include news concerning major economic indicators. For clients who are more detail-oriented, the report would automatically include press releases and detailed company research for sectors where the client has indicated interest.

Client engagement is the key to a successful wealth management practice. Beyond improving the client experience, technology can also reduce the amount of time you spend on non-client facing activities. Other tech that should be part of any advisory office:

  • Portfolio re-balancing software, such as Tradewarrior, can be easily integrated with your portfolio management platform, eliminating the labourious task of manually rebalancing portfolios.
  • Customer relationship management (CRM) software, such as Maximizer or an internally-developed solution. Good CRM software can help you efficiently manage your existing clients and provide you metrics that will help you hit your growth targets.
  • modeling software to handle portfolio balancing and trading
  • planning software to project the growth of your books
  • social media software to manage your reputation and reach out to clients online

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If your firm’s IT department can’t help you obtain this software, big development houses and start-ups may be able to assist. Onboarding multiple software packages simultaneously can be very stressful, so we recommend that you onboard your new software one package at a time, when possible. Start with the software that directly engages your clients and save the complex modeling software for last. Contrary to being impersonal, technology, when properly leveraged, will strengthen the relationship you share with your clients.

Steve Dwek and Jordan Pohn, PhD, are co-founders of Panadat.