Wealth Management Services Need to Put the Human Element Ahead of Technology

Wealth management technology turns data into recommendations, but what about the circumstances of someone's life that influence which choices are best? And what about people who aren't really comfortable with what the software advises? The shortcomings of robo-advisors are especially apparent in times of economic uncertainty. Keeping humans in the equation is important for quality wealth management services. And community banks in particular have an edge, this wealth management executive argues.

Money — and how we use it — gets personal. People worry if they are saving enough. Their lives are their own, so the wealth management strategies of their friends or family aren’t necessarily right for them. That can leave them uncertain how much to save and where to invest.

That kind of quandary has heightened with the mixed economic picture. A 2023 global survey by EY revealed that 40% of wealth management clients feel managing their money and property has grown more complex. Meanwhile, 57% of those with high net worth said market volatility is the primary reason they feel unable to meet their financial goals.

People benefit from a personal, holistic financial picture that makes sense for their situation. These days, they also want to be active participants in decisions regarding their investments and major life expenditures.

Some turn to technology alone — robo-advisors and financial planning software — to try to chart their own course. But they are short-changing themselves if they leave out the human element that a community bank can add.

Technology Can Only Take Wealth Management So Far

At Bangor Savings Bank, as community bank wealth management advisors, we see technology as an indispensable tool in developing our clients’ financial wellness roadmaps. Under today’s circumstances, clients want and expect us to use technology.

But the tech is a tool and the tool must be used appropriately.

Financial planning software can be a great way to see a client’s entire financial picture and run scenarios with specific financial goals in mind. Clients can access the software and link all of their accounts so we can see their entire financial picture. Plus, we can see their activity, which allows us to anticipate their needs. We can use the software to shed light on the feasibility of success so we can recommend changes to improve the likelihood they will meet their goals.

Technology instantly illustrates different scenarios using text and graphics. Clients want online visibility into their personal wealth portfolios.

Yet tech has significant limitations. Robo-advisors, financial planning software and online data “inputs” and questionnaires do not dig deeper. They can’t read body language. Nor can they pick up on an important nuance or casual remark in a face-to-face conversation. They can’t see the whole person.

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What Does the Wealth Management Customer Really Need?

Subjectivity, intuition and emotional intelligence are the most valuable tools in the community bank financial planner’s toolkit.

I have a client who, based on their income needs and time horizon, would rationally have a growth asset allocation of approximately 70% equities to 30% fixed income. This is precisely what a technology solution would recommend based on the customer’s manual inputs.

Reading Unspoken Signals:

Our conversations revealed this wealth management client had hesitations about the suggested asset mix. Their body language told me they were more risk-averse than you would think, based on their answers to questionnaries.

Software doesn’t pause for reflection. I did.

The client and I spent some time discussing why a more moderate strategy with less risk might better fit their preferences. The client appreciated the education and was more comfortable with the modified asset allocation. The client trusts we know what matters most to them.

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The Core of the Relationship Is the Community Bank Wealth Manager

Wealth management advisory is a personal, not transactional, business. It is based on trusted relationships. As community bank wealth management advisors, we are well-suited to show our commitment to our clients’ financial health. Our banks’ histories prove we understand and underpin the community’s fabric through all economic situations.

Advisors know how to guide people through market cycles and life changes.

Community banks are all about personal service. Before diving into our clients’ financial goals, we want to know what delights them and what worries them. What’s “a week in their life”? What are their hopes and dreams for today and the future? Knowing the answers to these questions goes a long way toward learning what they hold most dear, which should factor into their financial wellness plan.

Next, we seek to understand where they are coming from as an investor. What experiences have they had investing? What has frustrated them? What are they hoping to get out of their relationship with us? This allows us to lead language and explanations appropriately, so that we neither talk down to them nor use unnecessary financial lingo. Simply put, we meet them where they are.

We are accessible and patient.

We understand that when it comes to money management, trust must be built over time. A potential client may need to consult many sources before determining how to manage their wealth. If we’re always there to answer questions or point them to resources that can help them on their journey, they’ll remember us and come back to us — and refer us to others.

We keep in touch with our clients by reaching out regularly to check in. We should be asking such questions as: Is there anything keeping you up at night? Is there an exciting development that could change your financial picture, like a new baby, a high school graduate going off to college, or a new job opportunity?

We walk in our clients’ shoes.

When we truly view ourselves as part of the community and, likewise, a part of our clients’ lives, we learn and show interest in the things they care about. We do things like send them an article about “how to afford daycare,” a favorite recipe if they like to cook, or a review of a new restaurant if they love dining out.

By taking part in community programs and events, we see our clients and they see us in a shared activity. We even run into clients at the grocery store.

Community bank wealth management advisors provide greater value than robo-advisors or technology on their own. We are part of the lifeblood of the community, and our personal reputations are our greatest asset. By putting our clients first, we put our communities first.

About the author:
Sarah Gordon is vice president and relationship manager with Bangor Wealth Management, part of Bangor Savings Bank.

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