Category Archives: Technology

Resistance is Mutable: 5 Keys to Driving Technology Adoption in Financial Services

Technology is continuing its push to take over all aspects of customer workflow in financial services, from paperless onboarding to risk assessment apps to instant loan decisioning to algorithm-based portfolio construction. In fact, there are few aspects of the customer lifecycle that can’t be touched by technology. But “can’t be” is different from “won’t be” and that distinction often comes down to adoption by customer-facing personnel. While few technologies are perfect and there’s often a specter of tech replacing humans, in our experience neither of these is typically the cause of tech adoption struggles. More often than not, tepid adoption is due to a failure to appreciate the intensity of people’s resistance to change.

You may think that the current system is so inefficient/ineffective/clunky that everyone will love the new one, but that is not the case. Why? For starters, nobody likes to be told what to do. Moreover, even when people work with far-from-perfect systems and processes, they don’t always embrace the new, required solution because they have devised work-arounds that have become an integral – if imperfect – part of their routine. Finally, for customer-facing personnel, you can take whatever resistance exists and multiply it by 10 because those on the front lines of customer interactions are understandably anxious about using systems they don’t know and trust when under the pressure of dealing with customers looking for quick resolutions to their problems.

To overcome these obstacles and drive long-term adoption, here are five key components for success:

  1. Understand the audience. When you want to figure out how to get customers to buy, you seek out research and information about their attitudes, behaviors, and pain points to identify points of leverage. Driving adoption is no different. Sitting with, talking to, and watching future users in action will fundamentally shape how you should present the new technology to them and how you can communicate its value more persuasively.
  2. Appreciate their anxiety. Change is hard. As the saying goes, “better the devil you know than the devil you don’t.” Dismissing or underestimating the anxiety surrounding technology change is practically a guarantee that you will underinvest in driving adoption and will fall short of your goals.
  3. Calculate the impact. How much time saved? How much more accurate? And, most importantly, how do those gains translate into benefits to the users and their work? Most change management efforts come equipped with an ROI calculation, but these calculations are often based on a hypothetical future state, rather than the users’ current state. Identifying the time spent on activities today and the potential value of that time redeployed will lead to more compelling adoption communications grounded in reality.
  4. Market the change. Driving adoption means influencing behavior. Influencing behavior is the primary job of marketing (albeit one that typically applied to prospects). The same core elements of a successful marketing campaign – nailing the message, identifying the most effective communication channels, and measuring results – should be applied to your adoption efforts with all the rigor and discipline of a lead generation or customer retention campaign.
  5. It’s a marathon not a sprint. If you were launching a new product to a skeptical market, you wouldn’t promote it once at launch and then never again. Driving tech adoption must be approached the same way. It’s fine to launch with a splash, but if that isn’t supported by ongoing efforts to highlight successes, handle ongoing objections, and measure effectiveness, the opportunity for wide-spread adoption will be missed.

If these five components make driving technology adoption sound like a marketing campaign, that’s because it is. Many businesses talk about “selling” users on new technology but miss the most important inference of this language: before selling, you need marketing. A company may not get as excited about 95% adoption as it does about big, new sales deals, but the amount of money invested in new technology means that it should. A great but unused application has as much value to the company as a big but unsigned customer: None.

Advisor Fintech: Three Ideas for Capturing the Promise and Avoiding the Perils

TD Ameritrade Institutional’s FA Insights study (summary here) offers the following nugget regarding firm profitability:

Firms that focused on adding younger clients (under 55 years old) grew 2x faster than other firms…but were 1/3 less profitable than those serving older clients.

This is hardly surprising, as older clients have more assets and are likely to have settled into a consistent servicing process. The challenge is that attracting younger clients is necessary for the long-term health of the firm. Moreover, the asset profile of younger clients is not really something that firms can control so it’s difficult to affect the revenue side of the profit equation. That leaves firms with a need to reduce the costs of acquisition and servicing.

Fintech to the rescue?

The promise of fintech offerings – software that handles functions like client onboarding, risk assessment, financial planning and portfolio management – is to deliver cost savings through automation and digitization of these manual, time-consuming processes. The result: improved profitability.

The problem is that fintech only solves problems once it is successfully implemented. Until that point, it is an investment without a clear return. Even more importantly, software represents a solution for advisory firms, not necessarily their clients. There is a lot of wishful thinking behind the assumption that younger investors will universally embrace technology solutions. In fact, a recent survey of millennials (supported by other surveys as well) reveals that they WANT human interaction.

This isn’t to say that there aren’t plenty of opportunities for firms to introduce cost-saving technology AND enhance the client experience. The client onboarding process – e.g., capturing and transferring of financial documents – is a great example how software can facilitate a quick, smooth transition and lead to greater client satisfaction. But one example does not make the case. Moreover, even software that sits at the “sweet spot” of client experience enhancement and firm cost savings can be a false idol if it is difficult for clients to use.

Pre-empting fintech failure

The point is that just because technology offers the potential for benefits doesn’t mean that it automatically will. Firms need to have a realistic view of the potential benefits and risks and have a game plan for minimizing the possible disruption of valuable client relationships.

We recommend the following as key elements of that plan:

  1. Form a “technology council” – develop a list of trusted and valued clients who represent a cross-section of your client base and solicit their feedback on technology options
  2. Invest in onboarding and training – don’t assume that clients will be able to figure it out themselves; develop materials to make it easy to get started and provide ongoing support
  3. Monitor usage and satisfaction – just because you’re not hearing complaints doesn’t mean they like it; actively seek out information and feedback that can identify issues and best practices

These efforts will go a long way to ensuring that the benefits that should accrue from technology don’t get eroded by unanticipated problems.

Integrating Human and Machine Advice: Current State and Future Requirements

Several recent articles and pieces of news pertinent to robos and advisors create an interesting mosaic of the current state of human and machine advice:

The image created by these items depicts the struggles in the advisory business to settle on a clear, promising strategy for integrating advice channels.

The Limits of Disruption

When robos appeared on the scene several years ago, they were heralded as the future of wealth management, a democratizing blow for the industry, and a mortal assault on traditional financial advice. Any who have seen the hype machine movie before won’t be surprised that none of those things turned out to be true. In the real world, the biggest “robos” in terms of assets are those of Vanguard and Schwab that operate as hybrids while the “pure play” B2C robos have struggled to accumulate assets and breakeven on customer acquisition costs.

The reason for this discrepancy between reality and hype is simple: Irrational as it may sometimes be, most people want humans involved in their financial planning. A 2016 survey conducted by EMI and Boston Research Technologies showed not only that most want human involvement, but also that those who were more open to algorithm-driven investing didn’t neatly map to pre-conceived demographic categories. The bottom line is that you can’t will customers and prospects into following your vision for a service offering. Moreover, making assumptions about their behavior based on intuition and truism doesn’t create a strong foundation for success.

Changing Perspectives

The truth is that the majority of customers want a hybrid model. Many of the leading wealth managers understand this and have implemented or will implement various forms of hybrid offerings. In fact, as I mentioned earlier, the largest robos are actually those launched by existing wealth managers Vanguard and Schwab.

But any business heading down the hybrid path needs to recognize that their old models of and assumptions about client management and messaging will likely need to change. Specifically:

  • If portfolio management is outsourced to machines, it becomes a commodity and value must be defined in terms of relationships and communication—an idea that has been around for some time but which has not gained universal acceptance because it is hard to execute.
  • If you are advocating for clients to use your automated platform, you need to recognize that you are now responsible for their adoption of and satisfaction with the investment management software. Firms and their advisors need to be ready to assist clients onboard, answer their questions, and help them realize the full value of the software.
  • Pushing the wrong clients towards a robo solution is a lose-lose situation that will cost time and assets. Firms and their advisors need to have ways of identifying where clients are likely to fall on the spectrum of interest in and comfort with automated portfolio management, recognizing that age and net worth will likely not be great proxies.