What Advisors Need to Know: Balancing Technology and 1:1 Client Interaction

The process of saving for retirement has benefited from the onset of automated features and technology tools, which help streamline administrative actions for the participant, plan sponsor, and the advisor. However, advisors must be aware that automation has not replaced human interaction -- in fact, it’s quite the opposite.

A revealing report from Charles Schwab highlights this trend:

• Americans are more likely to automate their day-to-day finances than other daily activities. 
• Among those surveyed, financial planning today is considered as difficult as training for a marathon, but the majority (56%) would like the creation of a financial plan to be at least as easy as booking a hotel room.
• 86% of consumers prefer brands that make it easy to interact with a real person.
• 43% still prefer more human assistance over automation even for daily financial activities. Specific to their finances, consumers want access to a person who can guide them through bigger money matters such as portfolio management or developing a financial plan.^[1]

Ken Burtnick is not surprised. As Paychex’s senior manager of product management, he says that advisors must strike a balance between technology and human interaction.

“Automated tools can help an individual have a clear understanding of where they are in terms of financial wellness and retirement readiness,” he says. “But advisors need to supplement that with personal guidance around investment advice and wealth management.”

As assets increase, a greater commitment to client relations must follow suit. Burtnick points to service models that provide a host of benefits to plans that reach a certain asset threshold. Advantages such as a dedicated account manager for advisors and clients for the life of the plan are valuable because they can provide consultation at key stages, including annual compliance tests and 5500 reviews.

“Larger clients need more handholding through annual seasons, such as open enrollment,” adds Burtnick. “It’s important to provide the extra level of service and communications.”

Still, technology is a necessary tool to engage participants, especially helping them understand how their 401(k) balance at retirement will translate into monthly income. Part of Paychex’s console, or dashboard, approach does just that by showing what may seem like a large lump sum at retirement, and how it translates to a monthly stipend, which may not be enough for a retiree’s expenses. These tools help advisors show the reality at retirement so that participants can make adjustments today.

“Participants should be looking for a number of technology tools to help their planning. They should understand their income needs in retirement, be able to build budgets for day-to-day expenses, especially for important factors such as healthcare, and monitor whether they are on track, or need to adjust accordingly.”

Simplicity and ongoing monitoring begins with onboarding

But first, advisors need streamlined onboarding that is easy to understand, coupled with education to enroll individuals with just a few clicks. Burtnick also says that while auto-features are part of the process, they are evolving towards a more workflow-oriented approach for the participant and advisors.

Advisors are managing numerous aspects for each plan -- and each participant -- which demands automation that provides better-consolidated information.

Burtnick says advisors need to be able to access a plan “health report” that shows what’s working, what’s not and be able to monitor leakage or portfolio performance. This assists them in communication with their clients as well as focusing their energy where it’s needed most. Most importantly, the information must be in real time, so they can quickly act as they see fit.

“Real-time updates and reporting go hand in glove for today’s advisors.”

Overall, advisors are looking for systems that make it easier to build and maintain portfolios where they can, for example, change out investments over multiple plans with digital automation, saving them tremendous amounts of time.

For the future, Burtnick looks toward a major development in technology + human interaction: predictive analysis and artificial intelligence (AI). Calling it the “next generation of technology and personal service,” it will blend self-service with direct service.

“Here’s an example,” he says. “If the news isn’t good – say a participant is using their dashboard tools and sees that they are behind in saving for retirement – they might just shut down. We can use advancements in predictive analytics to alert the advisor so they can move the individual from self-service to direct service and get them past the hurdle.”  

This machine-learning approach can work with overall plan management too, says Burtnick.

“No recordkeeper can provide one-on-one service in a cost-effective way. However, they do have a ton of information that allows for predictive analysis to tee up changes in plan or participant outcomes, and then AI can provide answers or options.”

Inserting a more proactive service approach is what will bring technology and human interaction together.

“It’s not just about the size or scope of a plan, but what is happening to the client in each moment.”

^[1] https://www.aboutschwab.com/consumer-digital-demands-survey-2018