New research from global analytics firm Cerulli Associates finds that using technology to uncover what U.S. investors want is helpful, but personal interaction is needed to close the sale.
«There has been an explosive increase in the attention devoted to the evolving role of technology within the realm of retail investor relationships,» states Scott Smith, director at Cerulli. «Virtually all stakeholders, from advisory practices to asset managers to custodians and other service providers, feel the threat of disruption through disintermediation.»
Many assume that ongoing advances in technology will empower investors to handle their financial affairs without the assistance of traditional financial advisors. Cerulli believes that while technology innovations will transform how services are delivered, there will be an ongoing, and potentially increasing, demand for personalized advice delivered by humans.
«Since 2010, there has been a continuous stream of developments in the technology available for investors to monitor and manage their portfolios. However, during this period the self-directed investor segment declined from 45% to 33% across all households,» Smith explains. «At the same time, those households Cerulli terms ‘Advisor-Reliant’, who regularly consult with a financial advisor, increased from 34% to 43%.»
«We believe that unique elements of financial advice relationships will prove resistant to being cast aside in favor of purely self-service electronic relationships,» Smith continues.
«Data can help marketers understand what investors think and want relative to their finances, but wealth managers need to complement this insight with human interaction, predictive analytics, and communication,» Smith adds.