Advisers Counter Effects of COVID-19 With Technology

Like so many other industries, the financial planning community is being adversely impacted by the pandemic, Nationwide reported in a survey.

Advisers and other financial professionals say they have been adversely impacted by unemployment and business closures caused by the coronavirus pandemic, much like other industries, according to Nationwide’s sixth annual “Advisor Authority Study.” Conducted by the Nationwide Retirement Institute, the study is based on a survey of more than 1,800 advisers, financial professionals and individual investors.

“When advisers and financial professionals think about the success of their practice over the next 12 months, they think about the impact of COVID-19—and we understand their concerns,” says Craig Hawley, head of Nationwide’s annuity distribution. “However, by re-tooling with the right technology, advisers and financial professionals can continue delivering an exceptional client experience, retain current clients and attract new ones, ensuring their practice and profitability can withstand the outsize challenges of this pandemic.”

Twenty-nine percent of advisers and financial professionals say decreased profitability and client attrition are top concerns related to the pandemic for their practice over the next 12 months. Only 54% of advisers and financial professionals expect their profitability to increase in the next 12 months, down from 75% who said the same in the 2019 survey.

On the flip side, echoing this finding, 19% of advisers and financial professionals expect the profitability of their practice to decrease in the next 12 months, up from 6% in 2019. Of this group, 68% say it will be due to COVID-19.

Only 38% of advisers and financial professionals are optimistic about their financial outlook, down from 50% last year.

Twenty-one percent of advisers and financial professionals say adding technology is the most important thing they can do to improve the profitability of their practice over the next 12 months.

Nationwide says using technology to enhance the client experience is especially important, as adding new clients is consistently the No. 1 driver of profitability year over year. Twenty-six percent of advisers and financial professionals say providing a digital experience and self-service tools for clients is among their top concerns over the next 12 months. Twenty-four percent say providing a work from home strategy to their employees is important, as well.

Thirty-seven percent say serving clients remotely is the most important way they can use technology over the next 12 months. This outpaced 30% saying focusing on one-on-one relationships with clients was the most important, 28% saying providing more personalized holistic financial planning, 24% saying protecting clients’ assets from market risk, and 24% saying understanding client feedback about their experience and expectations.

Asked what new technologies they are interested in integrating into their practice in the next 12 months, 39% of advisers and financial professionals said e-signature solutions were their top choice. Next up were tools for risk management (34%) and mobile websites and/or apps (34%), followed by an interactive website/client portal (31%).

The survey also found that different generations of advisers and financial professionals have various concerns with respect to how the pandemic is impacting their practices.

They do tend to agree on providing a digital experience for clients, with 27% of Millennials, 24% of Generation Xers and 26% of Baby Boomers saying this is important. However, while 31% of Millennials say helping their employees work from home is a priority, this opinion is shared by only 22% of Gen Xers and 11% of Boomers. Fifty-seven percent of Boomer advisers are planning to begin using e-signatures, but only 36% of Millennial advisers and 34% of Gen X advisers have such plans.

Furthermore, 36% of Millennial and 32% of Gen X advisers want to integrate mobile websites and/or apps, but only 29% of Boomers share these plans. When it comes to integrating tax optimization software, only 19% of Boomer advisers are eyeing this offering, whereas 33% of Millennials advisers and 27% of Gen X advisers are. Using artificial intelligence (AI) and/or data analytics is yet another area for wide discrepancy among the generations: 33% of Millennials, 27% of Gen Xers and 13% of Boomers. Same for robo-advisers: 24% of Millennials, 15% of Gen Xers and only 4% of Boomers.