Advisors Are Investing in Technology, but Not Just for Their Clients

Today we will look at technology, not only in its context as the second most-popular sector that has been generating interest from advisors (according to TrackStarIQ), but also in the more anecdotal, individual sense — that advisors are relying more on technology in their day-to-day operations.

In last week’s Examiner Edition of Advisors in Focus, we shared that while many financial advisors had no choice but to move their practice to a home office since the COVID-19 outbreak, many are expecting to return (though less than half have specific plans to do so). In this Advisors In Focus: Examiner Edition, we examine the role that technology has played in the work-from-home movement and what some of the implications are for financial advisors going forward.

Technology is essential to the advisor-client relationship today. With many offices still closed due to the pandemic, advisors rely on other methods to talk to clients, such as virtual meetings, email, or phone conversations. Personal finance and wealth management are, after all, highly individualized businesses that require an ongoing dialogue with clients and prospective clients. Technology enables the personalization elements that help to foster and maintain a close relationship.

Technology can also help advisors win new customers. According to the previously-reported Red Zone Marketing survey of 641 respondents across 50+ broker-dealers, banks, and Registered Investment Advisors (RIAs), two-thirds of the participants affirmed that they are confident they can attract new business through virtual meetings.

Virtual meetings also require a quiet, distraction-free work area and the necessary computer and networking capabilities to reflect a professional image. For many advisors, this can mean carving out a dedicated office space in their home and upgrading computer hardware/software. While many will likely return to an office setting when safe to do so, others might choose to stay at home, or spend their workweek split between the home office and their corporate office.

Advisors are not just leveraging technology to serve clients from remote locations, but changing trends are also waking people up to unique investment opportunities. According to TrackStarIQ data, software (application) stocks are the second-most heavily researched industry group by financial advisors over the past thirty days (second to biotech). Also, of the top 10 industry groups, TrackStar rankings show that half are in the tech space (semiconductor, infrastructure software, internet retail, and internet content are also among the top 10).

  • Biotechnology
  • Software—Application
  • Auto Manufacturers
  • Diagnostics & Research
  • Internet Retail
  • Internet Content & Information
  • Entertainment
  • Semiconductors
  • Software—Infrastructure
  • Drug Manufacturers—Specialty and Generic

To be sure, technology poses unique challenges in the work-from-home era. Maintaining a secure connection to private client data is essential, a burden that increasingly falls on the shoulders of the advisor. All online business conversations must be secure and private. Financial advisors also want to consider the tax implications of working remotely and determine what home office expenses, including new technology investment, are deductible.

The bottom line is that COVID-19 has changed the United States workplace forever; financial advisors included. Moreover, the only way the change is possible is thanks to technology, which will also create some attractive long-term investment opportunities for advisors and clients alike.

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