WASHINGTON -- As advisors court a younger generation of investors and look to replace their own ranks with fresh blood, technology will undoubtedly be a major part of the story.
But some bedrock aspects of the business won't ever be replaced by sleek new devices or apps, a panel of industry leaders said recently at FINRA's annual conference.
Even if technology reshapes the way advisors interact with their clients, there will always be a human element to the business, according to Gregory Fleming, president of Morgan Stanley Wealth Management.
"We're committed to a model with the financial advisor at the center of the relationship," Fleming says. "Even millennials will still want some kind of interaction, even if it's technology-enabled."
So more client meetings are likely to take place remotely via video-conference, but Fleming and others are dismissive of the notion that robo advisors will come to replace the human variety on any significant scale.
And too great a reliance on technology at the expense of some of the fundamentals could even become a liability, warns Mark Cresap, head of Cresap, a brokerage firm based in Radnor, Penn.
"We've become so obsessed with technology and gadgets and the way we can do things that we need to stay focused on making sure our reps are trained to give good advice. Bad advice -- no matter how it's delivered -- is bad advice," Cresap says.
'STEEPED IN TECHNOLOGY'
That training, he says, is especially important with a younger generation of advisors, who, like the up-and-coming class of millennial clients, have never been through a "really grinding bear market," and could benefit from studying long-term performance charts to inform the advice they provide.
"That fundamental training is something that remains important, maybe more important than ever, because there's such an attraction with respect to the new technology," Cresap says. "That blocking and tackling stuff still is essential to the whole process."
Despite that abiding faith in the enduring role of the human advisor, the panelists concede the obvious, that the impact of technology on how the millennial generation approaches finance is a fundamental departure from any previous cohort.
"They are steeped in technology. When I talk about technology and digital today, we say this time it is different, and it's having a big impact on how our clients behave, on how our financial advisors behave," Fleming says.
"Millennials, both as clients and advisors," he says, "function very differently than any generation that's come earlier."
So they're digital natives. That means that the typical millennial client or advisor will expect technology to play a more central role in the way that they receive information and advice or perform their job than their predecessors.
Mary Mack, president of Wells Fargo Advisors, points out that shifts in consumer technology have revolutionized the way people access products and services, from shopping to Web search, and in the process have raised the bar for how consumers expect to be served in any sector.
"Investor expectations and needs are changing," Mack says. "We think about our business all the time, and our investors and our clients think about what they want. So they have experiences with Amazon, Google that redefine the way people want access to information, that redefine the expectation for our communication, and we all know that's a challenge in our business.
It has to do also with attracting the next generation, because who work for us want an environment in which they're used to operating."
But it's not just technology that advisors need to reckon with as they consider the expectations of the younger generation. The panelists also note the much-discussed diversity challenges that the advisory industry has been facing, particularly the shortage of women in the field.
Fleming cites the mounting sums of personal wealth that women are projected to manage over the coming decade, and argues that the advisory firms that embody that shift in the composition of their own workforce will be the ones best positioned to grow their business.
"The industry remains, both in terms of financial advisors and even the management teams, primarily male. We don't make the assumption that a woman client will insist on having a female advisor, but those female clients are going to want to see organizations that better reflect the society within which we operate," Fleming says.
"So we expect and are looking to increase the diversity within Morgan Stanley Wealth Management because it's good for business. We should reflect the world we operate in."
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