Can Technology be a Differentiator? by Sue Bergin

Nearly every marketing seminar you come across touches on differentiation. Market differentiation is that quality, or bundle of values or attributes, that makes you unique. It makes your services stand out from the crowded advisory marketplace.

Recently, SEI surveyed advisors and asked whether technology was used as a point of differentiation. 55% tout technical capabilities to some degree. To break that number down further, 15% said that they regularly tout technology as a differentiator; 45% occasionally use it.

40% said that they would never boast their technology because it wouldn’t be a selling point.

When these statistics overlay advisors’ responses to another statistic, a clearer picture emerges. SEI also asked advisors to describe their firm’s current use of technology. Here are the results:

• 12% claimed to be at the cutting edge, indicating that they have invested heavily and utilize its full capabilities.
• 58% said they had the right tools in place, but haven’t fully integrated them.
• 20% conceded that they have talked about upgrading their technology but haven’t gotten around to it.

There are several ways advisors use technology to gain efficiency and grow their practice. Client-facing technology investments improve the client experience. Financial planning software, mobile technologies, website design, and educational tools are types of client-facing technologies. They help the advisor provide added value and service to their clients.

Clients are far more likely to be impressed if they can see how the technology makes their lives easier. How encouraged will the client be if you have the tools to help them become more financially organized? Account aggregation and consolidated client reporting are other excellent examples. Some clients are drawn to innovative and “cool” technology that they can talk about to their friends. In this way, client-facing technologies can be a clear differentiator, particularly if the advisor’s technology offering is unique and has perceived value to the client.

Back-office technologies improve efficiency and increase effectiveness. CRMs, end-to-end business processes, transaction processing, and portfolio management all play a supportive, behind-the-scenes role in helping the advisor perform better. These systems are incredibly important to helping advisors grow their practice, but don’t share the limelight that a mobile wealth management application app might enjoy.

Advisors allocate their resources according to whether or not they view technology as a potential selling point to clients. 40% of the respondents to SEI’s survey did not see technology as a selling point. Those individuals likely invested in back-office technology, or are part of the 20% pool that conceded that they are in need of technology upgrades, but haven’t gotten around to it yet.

Without question, an advisor’s expertise and commitment to engagement in the relationship should always be the focal point of any pitch. Client-facing technology, however, does indeed play a role in shaping clients’ perception of value. In the eyes of an increasing number of clients, better technology means better service.

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