RIAs Need Fully Digital Workflows to Compete Post-Pandemic

Envestnet, Inc. has published a white paper, "RIA Digital Transformation: A Competitive Necessity in a Post-Pandemic Marketplace," discussing industry sentiments and attitudes toward practice digitalization. The report, commissioned by Envestnet and drafted by Aite Group, discusses how end-to-end digital capabilities can help registered investment advisers (RIAs) effectively engage and service clients, and achieve scalability and sustainability, after the present crisis ends.

Prior to the COVID-19 outbreak, most RIAs remained in the nascent stages of building out digital offerings, or had implemented digital tools but never made client usage and adoption a priority. The lockdowns, social distancing, and significant market volatility stemming from the pandemic have elevated digital engagement in importance. However, the current situation also exposes flaws in processes which are not fully digitized. Completing workflows which require manual intervention can be extremely difficult when operational volumes are high, clients are anxious, and staff members are working from home. This white paper outlines best practices for RIAs to transition all practice operations to the cloud, and support clients, during and after the COVID-19 pandemic—and also identifies the most essential digital capabilities for helping RIAs maintain their competitive edge.

"The COVID-19 crisis will have significant implications for how financial advice will be delivered going forward," said Andina Anderson, Executive Managing Director of Envestnet | Tamarac. "We are committed to providing advisors with the solutions and tools necessary for creating the digital experience that clients have come to expect in all areas of their lives outside of wealth management. This white paper is a vital educational resource for helping RIAs position themselves to engage clients, improve outcomes, and grow their practices in the post-pandemic world awaiting us."

Additional thought leadership content from Envestnet discussing key trends driving change in the wealth management industry, and their correlating impact on the future of advice, are available at https://www.envestnet.com/post-covid.  

While preparing the white paper, Aite Group conducted an online survey of 400 financial advisors in the U.S., including 98 independent RIAs as well as 48 hybrid RIAs with a broker-dealer affiliation, between April 2019 and June 2019. Major findings include:

  • Independent and hybrid RIAs consider the acquisition of new clients to be the top benefit of digitalization, and view digital tools as crucial for engaging younger prospects and the next generation of clients.
  • Few advisors are satisfied or very satisfied with their client-facing digital offerings.
  • Among independent and hybrid RIAs, client adoption of digital tools was low pre-crisis. At the time of the survey in the second quarter of 2019, only 24 percent and 27 percent of independent and hybrid RIAs, respectively, stated that most of their clients were utilizing digital access to reports and statements—and this capability achieved the highest client adoption rates. Only 12 percent of surveyed independent RIAs responded that the majority of their clients were checking investments and goals digitally, and 21 percent of hybrid RIAs indicated that most of their clients were using digital investment planning tools.
  • Prior to the pandemic, one-third of independent RIAs believed that offering client-facing, digital capabilities was a top priority, compared to 48 percent of hybrid RIAs. The higher percentage of hybrid RIAs can be attributed to the emphasis on digitalization by their broker-dealers.
  • Client communication and training are the most critical, and often overlooked, steps for RIAs seeking to drive client adoption of digital tools.
  • Best practices for RIAs engaged in the digital transformation include developing a formal strategy, dedicating technology resources, segmenting clients, and conducting vendor reviews.

"Client adoption, technology integration, and cost are among the top challenges that RIAs face as they digitize their practices and capabilities," said Dennis Gallant, Senior Analyst, Aite Group. "For many advisors, a bundled technology solution can help expedite the development of a unified, digital client experience incorporating financial planning, investment management, client reporting, account aggregation, and other key services. We are glad to partner with Envestnet to provide RIAs with a primer on the digital offerings they need to stay competitive and demonstrate greater value for clients.

To download a copy of "RIA Digital Transformation: A Competitive Necessity in a Post-Pandemic Marketplace," please visit https://tamaracinc.com/White-Paper-Aite-RIA-Digital-Transformation.


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