Brave new way of doing business

These technology investments come in many forms, including partnerships with fintech firms, such as robo-advisors, and investments in innovation hubs that are developing new technologies such AI, a branch of computer science dedicated to simulating human behaviour.

These investments already are leading to innovative communication and financial planning tools. And each of these changes will, in some way, alter the way you conduct business, from client communication to the automation of mundane administrative tasks.

Toronto-based Toronto-Dominion Bank (TD), for example, launched a new feature this month that automates the creation of client tax packages – a task that advisor teams typically perform manually.

Financial advisory firms are focused more than ever on using data analytics to gain insight regarding current and prospective clients and their investments. To that end, financial services institutions are investing in AI.

TD, for example, acquired Layer 6 Inc., a Toronto-based AI startup, in January. As well, Toronto-based Royal Bank of Canada (RBC) has made several investments in this area, such as the launch of Borealis AI, a research institute with labs in Toronto, Waterloo, Ont., Montreal and Edmonton. Furthermore, all the Big Five banks are financial supporters of the Vector Institute for Artificial Intelligence, a non-profit institute dedicated to AI research that’s co-funded by the federal government and businesses.

A big part of what AI can do is gather and analyze large volumes of data from several sources, including social media and web-browser activity, public reports and news stories. Such information could give you a better understanding of your clients’ overall personal and financial situation and point toward opportunities to talk to your clients about their finances.

But while technology is useful, technology at this level of sophistication raises some delicate questions. For example, AI could alert you that a client recently visited your website and downloaded several articles about buying a home. You could use this information to start a conversation about home ownership with that client or send her tailored information electronically. The question is: “Will that client appreciate such a gesture, or will she view it as a violation of her privacy?”

“The key is to not be creepy about [using the data],” says Chris Burke, vice president of digital solutions and sales enablement, with RBC’s wealth-management division.

To that end, RBC is seeking ways to enable its advisors to use this technology and educate them in how to communicate with their clients – without making the clients feel that their data’s privacy and security have been breached.

In addition to providing insight into clients, AI also can help you analyze your clients’ investment portfolios and to be more responsive to changes. This technology can gather and analyze public information available on the Internet related to specific companies, including mentions of a company on various social-media platforms.

Traditionally, gathering information on events that could affect clients’ investments, such as a fire at an oil refinery, takes a significant amount of time and resources. AI can gather and process that information at a much greater speed than you can do yourself and with fewer resources, Burke says, thereby providing real-time updates to you about companies held in clients’ portfolios.

The technology can go one step further and alert you to other companies or sectors that may be affected by the event in a manner that may not be obvious at first.

AI also may help you by acting as a digital assistant – similar to Apple Inc.’s Siri. You might issue voice commands to bring up information on a client’s portfolio or meeting notes.

As an advisor, you already have a growing availability of options in the ways you communicate with your clients – whether you use text messages, social media or videos. For example, RBC is developing secure messaging capabilities that will enable its advisors to communicate through platforms similar to Facebook Inc.’s Messenger or WhatsApp Inc.’s eponymous mobile instant messaging app.

Similarly, TD plans to roll out new video-conferencing capabilities to its advisors later this year. Initially, the platform will provide video only, but the goal is to move toward shared-screen capability, says Dave Kelly, senior vice president of TD Wealth Private Wealth Management.

This move is in response to the trend among clients toward being more “hands on” in using planning tools.

“Clients want to touch and feel the advice they get,” says Kendra Thompson, managing director and head of global wealth management with Accenture LLP in Toronto. That could mean clients can use digital tools to view various financial scenarios on their own time or together with you.

TD’s technology tools are tested and updated regularly through feedback with advisors, Kelly says. For example, TD’s Discovery Tool, financial planning software that uses behavioural finance principles, has been updated four times since launching in April 2017.

As well, besides changing how you do business, new tech capabilities may, in fact, alter the composition of your practice, from the services you offer to the number of clients you work with.

“There’s going to be an ability to serve far more clients,” Hurd says. “[Technology] also allows advisors to introduce a little more specialization to different client needs within their client base because they have that scale.”

Kelly believes that technology ultimately will bring clients and advisors closer together – not drive them further apart.

“If you look a little farther down the road,” he says, “we’re trying to drive toward a collaborative digital experience for advisors and clients.”