There’s No Place Like Home

Like Dorothy, investors have come to realize that there's no place like home. And that's coming into play as they look for the right financial adviser. Investors want advisers who can offer them more than quarterly meetings and Web tools to use by themselves. They want an adviser with whom they can collaborate from the comfort of their home.

"Firms will have to reinvent adviser technology to deliver something we call collaborative advice," insists Jaime Punishill, senior analyst at Forrester Research. Collaborative advice is a concept whereby the adviser uses Web tools such as cobrowsing, data sharing and alerts to proactively communicate with the client. In fact, Punishill predicts that collaborative advice is the next emerging trend in wealth-management technology, and that it will increase assets under management and cross-selling.

Forrester's research shows that 55 percent of investors are validators-investors who seek the counsel of advisers and participate in decision making-up from 47 percent in 1998. Yet, clients spend fewer than four hours a year meeting or speaking with their adviser, while the typical client spends nearly 14 hours a week online, according to the research firm.

To bridge this gap, companies have created all sorts of Web sites and voice-response units. "What's missing is the connection between the adviser and client," says Punishill. Advisers need to demonstrate interactive financial planning and answer questions in real time using visual tools. "Without those visual cues your clients don't understand what your advisers are talking about," says Punishill, who points to products from vendors like ScenarioNow in Manchester, Mo. and PIE Technologies in Midlothian, Va.

While very few firms have jumped on the collaborative-advice bandwagon, Forrester predicts it's on the radar screen for 2004. In the next few months, Fidelity Investments will introduce Web collaboration so that customers of Fidelity.com can view the same Web page as their customer-service representatives. "The rep and the client will look at the same page. The rep can actually drive the customer's PC," says Steven Elterich, president of Fidelity eBusiness.

Calling this a "virtual meeting," Elterich says, "it's as close as you can get to people sitting down together at a coffee table." This will let Fidelity touch a broader set of the population, she says, adding that ultimately the intent is to make collaboration "scalable to millions of customers." But not every firm has Fidelity's resources to explore technology on the cutting edge, and the idea has its skeptics.

In the case of JP Morgan's Morgan Online adviser workstation, which was offered to high-net-worth investors, relationship managers were alerted every time a client logged on or ran a risk-analysis scenario. This can be taken too far, says a source, because clients saw it as an invasion of privacy when advisers would surprise them with a phone call or e-mail.

But Punishill says that the privacy issues can be overcome, and that collaborative advice is not a fantasy. Several financial-planning platforms have collaborative tools built into them from vendors such as x.eye, NorthStar and Financial Profiles. Today, financial advisers generate PDF files for sharing data. "The review and proposal packages we produce are in PDF format, which provides better control for sharing information with clients and prospects," says John Tracy, manager of strategic initiatives, private-client division at RBC Investments.

Punishill says that these PDF files are too static. Though a compliance officer may like PDFs because they can't be changed, Punishill notes that an electronic system can keep track of every iterative version of the plan. "You have a living record of the discussion, better than when it happens over the phone or over a PDF," he says.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio