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Ep. 8: John O’Connell: Leveraging Data to Build Emotional Connections That Help Drive Growth
5 Plays8 months ago
According to a Morningstar study on why clients keep their financial advisors, 59% of the time clients are keeping their advisors for emotional reasons instead of financial ones. Only 12% of the clients surveyed mentioned investment returns as a reason for keeping their advisor. (1) With AI replacing many of the more transactional elements of what advisors traditionally have done, RIAs may want to be purposeful about strengthening their emotional connections with clients as part of their growth strategies. And if technology can get us only so far, that begs the question: Are advisors the solution to what AI can’t do? In this episode, John O’Connell, Founder and CEO of the Oasis Group, joins host Bill Coppel, Chief Client Growth Officer at TradePMR, to dive into this question. Listen as they explore: - How leveraging data to create more personalized client experiences can help drive business growth - Why focusing on niche communities can lead to stronger emotional connections with clients and give advisors a competitive edge - Growth opportunities that can come from getting a better handle on your existing client base Subscribe now, and connect with us on social media: - YouTube - LinkedIn - Facebook
Get the transcript for this episode, with sources, at
https://synergize.advisorevolutionsciences.com/ About John O’Connell: John is the Founder and CEO of the Oasis Group − a consultancy serving businesses in the wealth management, fintech, and financial services industries. John O’Connell and the Oasis Group are not affiliates of TradePMR.
More About John: LinkedIn: https://www.linkedin.com/in/johnokoconnell Website: https://theoasisgrp.com/about-us/about-john-oconnell/ If you want to join the conversation or connect with us, please visit us at synergize.advisorevolutionsciences.com. This content is provided for general informational purposes only. The views expressed by non-affiliated guest speakers are their own, and do not necessarily reflect the opinion of TradePMR or its affiliates. TradePMR and its affiliates do not endorse any guest speakers or their companies, and therefore give no assurances as to the quality of their products and services. This channel is not monitored by TradePMR. TradePMR does not provide investment advice, tax advice or legal advice. TradePMR is a Member of FINRA and SIPC. Trade-PMR, Inc. is registered with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB). TradePMR provides brokerage and account services to registered investment advisors. Custodial services provided by First Clearing. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. Copyright 2024 Trade-PMR, Inc. For a transcript of this episode, with sources, visit synergize.advisorevolutionsciences.com (1) Why Do Investors Keep Their Financial Advisors Around? Morningstar. Published Jan. 22, 2024.
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Transcript
Introduction to AI in Financial Advisory
00:00:01
Speaker
Welcome to Synergize, unscripted conversations where we explore the evolving role of the financial advisor in an emerging AI driven world.
00:00:11
Speaker
Join us as we bring together thought leaders across a range of disciplines and industry experts, sharing insights designed to help RIAs thrive in the industry of tomorrow.
00:00:22
Speaker
And now here's your host, Bill Capelle.
00:00:29
Speaker
Hi, I'm Bill Capell, Chief Client Growth Officer at TradePMR, and I want to welcome you to Synergize.
Emotional Value in Client-Advisory Relationships
00:00:36
Speaker
While working on this episode, I revisited a Morningstar article published earlier this year titled, Why Do Investors Keep Their Financial Advisor Around?
00:00:46
Speaker
The topic wasn't why clients leave their advisor, which is what we usually hear about, but instead why they stay.
00:00:53
Speaker
According to Morningstar's research, 59% of the times clients keep their advisors for emotional reasons instead of financial ones.
00:01:03
Speaker
And only 12% of clients mentioned investment returns as a reason for keeping their advisor.
The Impact of AI on Wealth Management
00:01:08
Speaker
So what goes into creating those emotional connections?
00:01:12
Speaker
And with generative AI replacing many of the more transactional tasks that advisors traditionally have done, how does technology fit into the equation?
00:01:21
Speaker
An observation.
00:01:23
Speaker
I believe technology will only get us so far, which begs this question.
00:01:28
Speaker
What will wealth management look like with this avalanche of technology emerging?
00:01:33
Speaker
And how will the role of the advisor evolve?
00:01:36
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My guest, John O'Connell, is here to help us unpack and address this question.
00:01:41
Speaker
Technology should always be a force multiplier, right?
00:01:44
Speaker
It doesn't replace anything that we do.
00:01:46
Speaker
It makes it easier for us to do more of it faster, right?
00:01:51
Speaker
So that's really important for people to think because a lot of people are asking questions about AI and kind of what this is going to do for me.
00:01:57
Speaker
For the firms that understand AI and can embrace it, just like the firms that embraced AI
00:02:04
Speaker
you know, computers or firms that embraced the ability to do portfolio management or financial planning tools.
00:02:11
Speaker
All those tools help them to do more faster.
00:02:14
Speaker
And I think you're going to see that same thing.
00:02:16
Speaker
So when you come down to what does it mean for the advisor today and how does this actually help them grow?
00:02:22
Speaker
I think what you really want to take a look at is number one, where can I use this technology today to be able to better serve my client?
AI's Role in Client Relationships: Insights from John O'Connell
00:02:30
Speaker
John is the CEO and founder of the Oasis Group, a consultancy serving businesses in wealth management, fintech, and the financial services industry.
00:02:40
Speaker
I had a chance to talk with John about ways advisors might want to leverage technology to help them build the kinds of emotional connections with clients that help cement relationships and lead to growth.
00:02:53
Speaker
Here's our conversation.
00:02:57
Speaker
John O'Connell, welcome to Synergize.
00:03:00
Speaker
Thanks very much, Bill.
00:03:01
Speaker
Thanks for having me.
00:03:02
Speaker
So John, you've been working in the financial service space for most of your career now, and you've seen a lot.
00:03:10
Speaker
As you think about it, has the current state of the financial services industry, how has that shifted in the time that you've been in the business?
Service Orientation in Financial Industry
00:03:22
Speaker
Well, I can draw a parallel if you'll allow me to.
00:03:25
Speaker
I mean, in financial services, we've kind of gone very much from more of a product type of focus, right?
00:03:31
Speaker
Even the times that I was at Merrill and I was there twice, it was very much focused on kind of the products that Merrill was producing and the products that investors could pick up.
00:03:40
Speaker
You know, and what I see is we're moving very much towards more of a service, professional services, more orientation.
00:03:48
Speaker
And I'll kind of give you like an idea of how I'm seeing that.
00:03:52
Speaker
Like, I like to think of, you know, in professional services, I was at KPMG, we were a professional services company.
00:03:58
Speaker
We had management consulting, tax audit.
00:04:00
Speaker
But at the end of the day, we were really helping companies at that point to be successful with the finances of their firm, right?
00:04:08
Speaker
And when you think about where we are in financial services today, we're at a point where people are really expecting a higher level of service from the wealth management community.
00:04:19
Speaker
And that's what's really driving a lot of the innovation and the direction we're going in.
00:04:23
Speaker
So let me just jump in.
00:04:24
Speaker
I think that's what you're seeing.
00:04:25
Speaker
Right.
00:04:26
Speaker
It is.
00:04:26
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And I want to jump in and emphasize a point you're making, John, which is what I didn't hear you say is anything about portfolio management.
00:04:33
Speaker
No.
00:04:34
Speaker
So there's a shift going on from your standpoint, moving to more of a broader service focus versus a product focus or even a solutions focus, right?
00:04:46
Speaker
So we've gone from product to solutions.
00:04:48
Speaker
Now we're really into creating a better outcome or experience.
00:04:53
Speaker
Talk more about what you're seeing in that space.
00:04:57
Speaker
Well, let me give you a parallel, right?
00:04:59
Speaker
I mean, think of some of the other industries where we've seen service and we've seen this shift from being a product to a service.
00:05:07
Speaker
I'm gonna give you a really concrete example of that.
00:05:09
Speaker
When I booked my honeymoon, I got married in 95.
00:05:11
Speaker
When I booked my honeymoon, we booked it through a travel agent.
00:05:14
Speaker
Of course you would.
00:05:14
Speaker
Why wouldn't you work with a travel agent?
00:05:16
Speaker
And they got commissions for that.
00:05:18
Speaker
This is gonna sound very familiar.
00:05:20
Speaker
What happened is you had new technologies that came into play which allowed people to self-service.
00:05:25
Speaker
There were a lot of new applications that came up via the World Wide Web where people could go on and book their own travel.
00:05:31
Speaker
They could book their own flight as a great example.
00:05:33
Speaker
Then, of course, we had COVID, which was another massive shift.
00:05:37
Speaker
Here's another really interesting statistic.
00:05:39
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The largest rise of people using travel agents are millennials.
00:05:44
Speaker
Now, why is that?
00:05:45
Speaker
It's the service.
00:05:47
Speaker
It's because of the professional service.
00:05:49
Speaker
They can easily book a flight on their phone.
00:05:51
Speaker
They're quite adept at technology.
00:05:53
Speaker
They could easily do that.
00:05:54
Speaker
Why do they go to a travel agent?
00:05:55
Speaker
Because they want a superior level of service.
00:05:58
Speaker
They want someone who's going to give them an experience, not just, hey, I'm going to go to Ireland.
00:06:04
Speaker
I want to go to Ireland and I want to know the best places to stay and the best places to eat.
00:06:09
Speaker
And I want to know how I can do that on my own or with a guide.
00:06:13
Speaker
And that's the really big shift that you're seeing.
00:06:15
Speaker
And when you draw that to the parallel, I mean, we've already talked, like I've already mentioned some of the big parallels between that and financial services.
00:06:23
Speaker
But why are you seeing in the great wealth transfer with all this money moving to younger investors, you're seeing younger investors demanding a multiple service.
Young Investors and Service Expectations
00:06:32
Speaker
You know, it's funny.
00:06:32
Speaker
I talk with a lot of financial advisors and they say to me, I'm not seeing fee compression.
00:06:36
Speaker
I'm still at about 100 bps.
00:06:38
Speaker
okay well you're at 100 bips but now you're doing your tax return you're taking you're you know handling college planning you're handling all these extra services for the same money so you are shifting to more of a service culture right we have to start to do more what's interesting about the parallels you've identified is that what i'm hearing here and i think this is an important uh point that i i want our listeners to kind of think about which is the more transactionally based
00:07:08
Speaker
an activity is where once an intermediary had to handle that.
00:07:13
Speaker
Another example is a grocery store, right?
00:07:15
Speaker
You know, you used to get in line to have somebody who could actually do arithmetic work a machine that would add up what you bought.
00:07:22
Speaker
You know, that transition to, well, we don't need somebody who knows how to work arithmetic any longer.
00:07:26
Speaker
We can just scan these barcodes.
00:07:28
Speaker
It'll tell the computer and it'll add it up.
00:07:31
Speaker
Then we moved to the fact that now I don't have to wait for somebody to do that for me.
00:07:36
Speaker
I can do it myself.
00:07:38
Speaker
to the point today where I can walk down an aisle in a grocery store with my smartphone, scan an item, it immediately hits my credit card and I can walk out the door and virtually have no interaction with anybody.
00:07:48
Speaker
So when you talk about service, it has to be meaningful.
00:07:53
Speaker
And the example you give with the travel agency business and millennials, you know, typically gravitating that way.
00:08:01
Speaker
Perhaps, and this is what I want to get your reaction to, is so why?
00:08:06
Speaker
Is it that emotional confirmation or that feedback they're getting from the travel agent that's helping them make a better decision?
00:08:15
Speaker
I think it's the level of service that really is helping them to make that better decision, right?
00:08:19
Speaker
So they're going to a travel agent, just like they would go to a wealth management firm because they want that level of expertise.
00:08:27
Speaker
You know, there's a lot of talk today about how many young investors get their financial advice from the internet, right?
00:08:34
Speaker
From TikTok or Instagram.
00:08:36
Speaker
And I think that that is fine for an investor that's just starting because they don't know any better yet.
00:08:42
Speaker
But when they start really accumulating any sizable wealth, they want a professional.
00:08:46
Speaker
They want to talk to someone who knows more about that subject than they can and can provide them with really good advice.
00:08:53
Speaker
And I think that that's one of the reasons they turn to a financial advisor, right?
00:08:58
Speaker
Think about before too, we used to really focus very heavily on just investment management.
00:09:03
Speaker
Now, when you talk to most financial advisors, there are very few that are not doing financial planning in conjunction with the investment management.
00:09:12
Speaker
And the reason is because I think the consumer is much more educated now.
00:09:15
Speaker
They want a level of expertise.
00:09:17
Speaker
They want a plan that they can execute with the financial advisor in partnership with them to really achieve their goals.
00:09:25
Speaker
So that's one of the directions that I think you're seeing.
00:09:27
Speaker
It's like, I need to be really personal.
00:09:30
Speaker
I need to talk to you, Bill, about your needs and your wants.
00:09:33
Speaker
And the plan needs to reflect your goals and aspirations.
00:09:37
Speaker
And if we can establish that level of personalization with someone, you're going to have a lifelong relationship with them.
00:09:45
Speaker
And if you're picking up younger investors, that could lead to an enormous amount of revenue over time.
00:09:50
Speaker
In a lot of cases, established financial advisors have multiple generations that they're dealing with simultaneously, all with different perspectives on what service means and different sets of needs.
Personalizing Interactions with AI
00:09:59
Speaker
Let's pivot for a moment and talk about artificial intelligence in the context of this conversation, right?
00:10:05
Speaker
We know that artificial intelligence will get us so far.
00:10:09
Speaker
It can certainly answer a lot of the technical questions that you might want to get answered directly.
00:10:14
Speaker
by a financial professional.
00:10:16
Speaker
Talk a little bit, John, your experience about how advisors need to leverage the technology of the day, but at the same time, create a personal experience with a client.
00:10:29
Speaker
So let's think about that for a minute, right?
00:10:32
Speaker
So first at the base level, artificial intelligence is relying upon really good data, right?
00:10:39
Speaker
So the better the data, the better the AI outcome that you're gonna get.
00:10:42
Speaker
And a lot of that data will come in dialogue and conversation with the client.
00:10:47
Speaker
Am I correct in saying that?
00:10:48
Speaker
Absolutely.
00:10:49
Speaker
Absolutely.
00:10:50
Speaker
Think about all the information that you gather when you sit down with a client and have a conversation with them, right?
00:10:56
Speaker
They're going to tell you about their kids' aspirations.
00:10:58
Speaker
They're going to tell you about trips they're going to be planning.
00:11:01
Speaker
They're going to tell you about trips they've already done, all of which have a financial impact that you want to be able to discuss with the client, right?
00:11:07
Speaker
Sure.
00:11:09
Speaker
John, let me just jump in for a second because you raise a really good point.
00:11:12
Speaker
They want to tell you about these things.
00:11:14
Speaker
Are advisors well positioned to ask the right kinds of questions to elicit that response?
00:11:19
Speaker
Because typically it's bring your, you know, bring your manila envelope with all your financial papers and it will go through it.
00:11:26
Speaker
That's a different conversation you're talking about.
00:11:29
Speaker
It's a very different conversation.
00:11:30
Speaker
So talk about what that conversation needs to be.
00:11:33
Speaker
If you look at some of the advisors that are growing the most today, right, the riches are in the niches.
00:11:38
Speaker
So what you find is these advisors are niche operating.
00:11:41
Speaker
They focus on a specific set of investors.
00:11:44
Speaker
And I'm not talking about investors that have a certain minimum, you know, investable assets, right?
00:11:50
Speaker
We've talked to advisors.
00:11:51
Speaker
There was an advisor that we spoke with that is absolutely crushing it.
00:11:54
Speaker
They've hired 20 people in their office.
00:11:56
Speaker
financial advisors, junior advisors, and they focus on police and firemen out in the Arizona area.
00:12:02
Speaker
right, they can have a real conversation about some of the challenges that cops and firemen have in saving for retirement, the concerns they have around life insurance, it's a dangerous job.
00:12:12
Speaker
I can give you hundreds of examples of this where people are focusing on really niche communities so they can have a more intimate conversation with them and capture some of those details.
Specialization and Niche Services for Advisors
00:12:22
Speaker
If you're moving from, think of it like this, a financial advisor will call up and say, if you're a medium sized advisor, say about 200 to 300 million,
00:12:31
Speaker
A lot of folks are concerned about the service they may be able to get from some of their service providers because they're not big.
00:12:36
Speaker
Right.
00:12:36
Speaker
Right.
00:12:37
Speaker
And they say, they've said to me, John, if I call service provider A and the next phone call they get is from a $2 billion firm, what kind of service am I going to get at the end of the day when they're going through all their action?
00:12:48
Speaker
Think about that as you're providing the advice to your clients, right?
00:12:51
Speaker
If you're talking to some clients that are ultra high net worth and then some clients that are mainstream millionaires,
00:12:57
Speaker
At the end of the day, when you're going through your action on him list, what's bubbling to the top and what's not bubbling to the top?
00:13:03
Speaker
So if you can focus more effectively on a specific niche, then you can have these conversations and that's gonna drive your data strategy as
The Importance of High-Quality Data for AI
00:13:13
Speaker
well.
00:13:13
Speaker
The data that you capture is gonna be driven by that.
00:13:16
Speaker
And if you've got really good data, then you can start leveraging new technologies that are out there like better reporting, business analytics, or even AI.
00:13:25
Speaker
So I do think that there's opportunities there for advisors to really look at their practice and say, if I'm gonna prepare for the future,
00:13:34
Speaker
and I'm gonna think about where I wanna go, where does my practice wanna be in 10 years or 20 years?
00:13:39
Speaker
How do I do that today?
00:13:40
Speaker
What questions should I be asking today?
00:13:43
Speaker
Not only of myself, but of the direction I want my business to go in.
00:13:47
Speaker
So what I'm hearing you say is better questions, capturing that information,
00:13:53
Speaker
using that or converting that information into data where you begin to, as I understand AI, artificial intelligence, really is the ability to process large sums of data to look for patterns and eliminate data that's irrelevant to what we're doing, right?
00:14:10
Speaker
So it's narrowing that focus.
00:14:12
Speaker
As a financial advisor today, as an RIA specifically, John, how should I be thinking about AI?
00:14:18
Speaker
Where should I be thinking of inserting it into my business now?
00:14:23
Speaker
Well, first, you should definitely get educated on what AI is, right?
00:14:27
Speaker
A lot of people think AI is just chat GPT.
00:14:30
Speaker
And although chat GPT is really interesting, that's not encompassing of AI.
00:14:35
Speaker
That's like saying alternative investments are non-traded reads.
00:14:38
Speaker
There's a lot in the alternative investment space besides non-traded reads.
00:14:42
Speaker
There's a lot in AI besides chat GPT, right?
00:14:46
Speaker
So break that down.
00:14:47
Speaker
Yeah, break that down for our audience so they understand what you're talking about there.
00:14:52
Speaker
Absolutely.
00:14:53
Speaker
So predictive text, we've had that forever on your phone, right?
00:14:57
Speaker
When you type and it knows what word you're typing, that's predictive text.
00:15:01
Speaker
Generative predictive text, which is the GPT of chat, what that actually is, is the ability to predict what you're going to write next.
00:15:10
Speaker
Not just the word, but actually predict the next sentence or the next paragraph.
00:15:14
Speaker
And it does that by understanding a really large amount of language.
00:15:19
Speaker
We also have large language models.
00:15:20
Speaker
Think of all the acronyms we use in wealth management today.
00:15:24
Speaker
If my language model does not understand those acronyms, it's not going to understand the context and it's not going to be able to produce any good results.
00:15:31
Speaker
So second piece of AI is language models.
00:15:34
Speaker
Third piece is neural networks, right?
00:15:36
Speaker
Where you can have AI actually make predictions about what your outcome is going to be.
00:15:41
Speaker
That takes an enormous amount of data to do, but neural networks are it.
00:15:45
Speaker
Machine learning is part of AI, right?
00:15:48
Speaker
Using AI to be able to look at a large amount of data and then as the data is being processed to be able to learn more and more about that data in a machine learning way.
00:15:59
Speaker
So the first recommendation I would say if you're an RA is number one, get educated on the different types of AI and what they are.
00:16:07
Speaker
Because when someone says AI to you, your first question should be which, what portion of AI are we talking about?
00:16:13
Speaker
The second thing I would say is start to understand how AI uses data, not in an intimate computer science way, just in a business way.
00:16:21
Speaker
The more data you have, the cleaner the data, the better the outcomes you're going to get.
00:16:24
Speaker
That's fairly simple.
00:16:26
Speaker
So if you start to look at your data, that's going to give you a really good idea.
00:16:31
Speaker
And then, of course, coming back to what I talked about a moment ago, understand what is the outcome you want to achieve.
00:16:38
Speaker
If the outcome is I want better marketing messages, I want to be able to send out more personalized marketing messages, well, then any kind of predictive text that uses a large language model may be great for you.
00:16:50
Speaker
If you want to have a better logo, then go look at one of the programs that will generate images for you.
00:16:57
Speaker
Understand what you want to do and then go look at the solution set that you may want to pick up.
00:17:03
Speaker
John, that was a great description and a little primer on sort of the various aspects of artificial intelligence, some of the technology of the day.
00:17:11
Speaker
I want to change gears again and focus on a couple of different things.
00:17:17
Speaker
The big buzzword right now is that what's going to be really important is this notion of personalization, okay?
00:17:24
Speaker
And of course, the opportunity to grow.
00:17:27
Speaker
How do I become better at running my business?
00:17:30
Speaker
How do I get better at serving my clients?
00:17:32
Speaker
And ultimately, how do I grow my platform?
00:17:34
Speaker
So what I want to turn a conversation now to is a bit more of a practical discussion about what are the things that RIA firms, advisors in general can do leveraging this technology to create a better, personal, deeper relationship with the client
00:17:52
Speaker
and become more competitive at the same
Enhancing Relationships with CRM and AI
00:17:54
Speaker
time.
00:17:54
Speaker
Technology should always be a force multiplier, right?
00:17:57
Speaker
It doesn't replace anything that we do.
00:17:59
Speaker
It makes it easier for us to do more of it faster, right?
00:18:04
Speaker
So that's really important for people to think because a lot of people are asking questions about AI and kind of what this is going to do for me.
00:18:11
Speaker
For the firms that understand AI and can embrace it, just like the firms that embraced AI
00:18:17
Speaker
you know, computers or firms that embraced the ability to do portfolio management or financial planning tools, all those tools help them to do more faster.
00:18:27
Speaker
And I think you're going to see that same thing.
00:18:29
Speaker
So when you come down to what does it mean for the advisor today and how does this actually help them grow?
00:18:35
Speaker
I think what you really want to take a look at is, number one, where can I use this technology today to be able to better serve my client, right?
00:18:44
Speaker
Either that is, let me understand my clients better, in which case, start mining your CRM data.
00:18:50
Speaker
You don't need AI for that, by the way.
00:18:52
Speaker
Just start running reports in your CRM data and figuring out what's my ideal client look like?
00:18:57
Speaker
Which client do I have all of their money?
00:19:01
Speaker
Which clients have a lot of held away?
00:19:03
Speaker
Why do they have held away?
00:19:04
Speaker
Like what's what am I not providing them that they don't want to move that money?
00:19:08
Speaker
Right.
00:19:09
Speaker
Start thinking about some of those.
00:19:10
Speaker
And then one thing that I would also say is a lot of financial advisors that we talk to have an enormous amount of information locked up in these big text notes that are sitting either in their financial planning tool or in a notebook, in a drawer or like in their CRM.
00:19:28
Speaker
When it's locked up like that, you can't mine it.
00:19:30
Speaker
You can't search it.
00:19:32
Speaker
It's not easy to get to.
00:19:34
Speaker
So think about how can I unleash that information for me to make better decisions about my client and make better decisions on how to service them.
00:19:44
Speaker
And that's going to be, that's really important.
00:19:46
Speaker
So if you struggle to know that, you know, the children's names of your, of your client, or you don't know their birthdays, that's pretty easy to be able to track.
00:19:56
Speaker
Start thinking about where am I tracking that today?
00:19:59
Speaker
Can I track that better?
00:20:00
Speaker
Because the deeper relationship I have, the more referrals I'm going to get from that client, the
00:20:06
Speaker
Right, which a lot of advisors still grow very much by referral.
00:20:10
Speaker
So how do I how do I mine that data to drive deeper relationships which are going to drive more referrals for me?
00:20:17
Speaker
And that's going to help you to grow.
00:20:20
Speaker
Well, that's a great point.
00:20:21
Speaker
And so what I'm hearing you say is that we have a lot of data.
00:20:25
Speaker
It's probably not as organized as it needs to be.
00:20:29
Speaker
And rather than kind of guess and continue to do things the way we've always done them, start to dig deeper into finding and understand
00:20:39
Speaker
and discover the patterns with the data that you've got on your clients, whether it's in your CRM or in a notebook someplace or in some text notes, as you mentioned, there's technologies that can convert that text note into data, but really start to mine the data.
00:20:53
Speaker
Right, mine the data to learn more.
00:20:56
Speaker
And I heard you say to create a deeper relationship, which is very different
00:21:01
Speaker
than what we have traditionally done in the past.
00:21:04
Speaker
Why does that matter?
00:21:05
Speaker
And how does that link back to personalization?
00:21:07
Speaker
Because, you know, let's face it, Steve Jobs, Jeff Bezos taught us that we can have whatever we want, whenever we want, immediately the way we want it, right?
00:21:20
Speaker
And so we have multi generations of people who are wanted a very specific way.
00:21:28
Speaker
Like to account for marketing, it's about marketing to you as an individual.
00:21:31
Speaker
It's no longer a market, it's an individual.
00:21:35
Speaker
How do you see that manifesting itself relative to the data that you're talking about and creating this personalized relationship?
00:21:44
Speaker
You know, it's really interesting when you think about the personalization that you see today, that doesn't only extend to the big ones like you mentioned, Amazon.
00:21:53
Speaker
Go into Starbucks.
00:21:55
Speaker
All right.
00:21:55
Speaker
And when you go into Starbucks, if you have the Starbucks app, Starbucks can actually say to you, hey, why don't you order your recommended drink?
00:22:03
Speaker
It remembers your recommended drink.
00:22:05
Speaker
It remembers the way you like your coffee.
00:22:06
Speaker
Sure.
00:22:07
Speaker
So how did they do that?
00:22:09
Speaker
Well, they made a big investment years ago on data, on making sure that if you had the Starbucks app, I knew the Starbucks that you went to the most from geolocation on your phone and where you placed the order.
00:22:20
Speaker
And I knew what your drink was based on the number of orders you placed.
00:22:23
Speaker
So I can tell you definitively, you like an egg sandwich on a Monday morning with your coffee, but you don't like it on the other days.
00:22:30
Speaker
Right?
00:22:31
Speaker
How did they do that?
00:22:32
Speaker
Well, they focused on the data.
00:22:34
Speaker
They didn't just capture data for the sake of capturing data.
00:22:37
Speaker
They captured data for a very, very specific reason.
00:22:41
Speaker
Because when they know it's your birthday, they offer you a free coffee.
00:22:44
Speaker
Why?
00:22:45
Speaker
Because when you go in there for a free coffee, you're probably going to get something else.
00:22:48
Speaker
Right?
00:22:49
Speaker
And it's tapping into that personalization of you.
00:22:51
Speaker
It's your birthday, we're gonna celebrate you with a free coffee.
00:22:55
Speaker
So that personalization has pervaded, pretty much it's everywhere at this point, right?
00:23:01
Speaker
Amazon knows what you want.
00:23:03
Speaker
Alexa knows what you play.
00:23:04
Speaker
Spotify gives you recommended lists.
00:23:06
Speaker
So we're very slow to move in the financial services industry around that, right?
00:23:14
Speaker
And I think that that's to our detriment.
00:23:16
Speaker
Because when you think about some of the people that are trying to mine this data now moving forward, think about all the competition we have in wealth management, right?
00:23:25
Speaker
Wealth management, although REAs is one of the area we work with the most, you know, and the one that you're most familiar with with Trade PMR, we've got banks that are trying to offer wealth management advice.
00:23:35
Speaker
We've got broker dealers trying to offer wealth management advice.
00:23:38
Speaker
There are applications trying to offer wealth management advice.
00:23:42
Speaker
So there's a lot of competition out there.
00:23:45
Speaker
If we're not going to move quickly and understand that data and drive that deeper personalization, there's just too much choice available in the marketplace today and people can go elsewhere.
00:23:56
Speaker
So if you're an RIA and you're listening to this podcast,
00:24:00
Speaker
I encourage you get a handle on the data you currently have.
00:24:04
Speaker
Get a handle on your client base.
00:24:06
Speaker
I can't even tell you how many REAs we talk to where I say, what's the average age of your client base?
00:24:10
Speaker
And they're like, well, that's interesting.
00:24:11
Speaker
I actually don't know the average age of the client base.
00:24:14
Speaker
I couldn't graph that for you and tell you what that looks like.
00:24:17
Speaker
That's really easy to be able to do.
00:24:20
Speaker
And that can tell you a lot of things about your practice.
00:24:22
Speaker
So you can drive action items.
00:24:25
Speaker
directly from the data you already have today.
00:24:28
Speaker
So I think if you're listening to this and you're not on top of that data, it's going to affect your growth.
00:24:35
Speaker
You may not be seeing it right now, probably because you may not be measuring it as well as you should, but it is going to affect your growth over time.
00:24:43
Speaker
And the last thing I'll say on that point is, we have a lot of advisors we talk to that would like to monetize their practice at some point in time.
00:24:51
Speaker
Sure.
00:24:51
Speaker
If you were to try to sell any business and you don't know the longevity, the history of your clients, how long you've had them, you don't know the average age, you don't know the buying propensity.
00:25:02
Speaker
If you sold any business outside of the RIA space, those are questions that are very common for even a valuation team to ask you to value your business.
00:25:11
Speaker
So if you are in the wealth management industry and your business is probably the largest asset you have next to your house,
00:25:18
Speaker
it's probably in your best interest to understand some of these things, especially now when you're not at a point where maybe you have to get out of the business quickly.
00:25:27
Speaker
That's right.
00:25:28
Speaker
And to kind of sum up what you just said, what struck me is that advisors, myself included, when I was an advisor, we anecdotally have a sense.
00:25:39
Speaker
But what you're saying is that's not good enough.
00:25:41
Speaker
You need to factually be able to frame exactly what your client base looks like, both to understand the value of your business, but more importantly, to look for those patterns to get more information.
Expanding Beyond Traditional Investments
00:25:52
Speaker
insight and build deeper relationship with those clients to address the things that they're not talking to you about.
00:25:58
Speaker
And it goes a little bit back to your Starbucks analogy and what I would share with you on that fact is it's great that they know on Mondays you like your coffee and an egg sandwich.
00:26:09
Speaker
But what that technology also does is it begins to understand more about you and your eating patterns and suggest new things at various times to expand the relationship with Starbucks.
00:26:22
Speaker
I think we can do similar things with our clients.
00:26:25
Speaker
As we learn more about them, we can begin to expand that relationship beyond sort of what's been the centerpiece, which is their portfolio.
00:26:33
Speaker
So, John, in the few minutes we have remaining, share with our audience
00:26:38
Speaker
What are the three things you would recommend advisors take away from this conversation that they could implement or at least begin to start a process to implement to help them become, to create a more personalized experience for their clients and ultimately grow their business?
Curiosity, Data Gaps, and Personalization
00:26:55
Speaker
I'd say the first thing is be curious about your existing client base.
00:26:59
Speaker
And not just the annual meetings that you have or preparing for those annual meetings.
00:27:05
Speaker
Really be curious about them.
00:27:06
Speaker
Take an opportunity to sit down and take a look at who are my current clients today?
00:27:11
Speaker
What is their demographics?
00:27:13
Speaker
What's the commonality that I have?
00:27:15
Speaker
Ask yourself those kinds of questions.
00:27:17
Speaker
That's going to really help you to identify not only opportunities with your existing clients, but that's going to inform everything else you have.
00:27:24
Speaker
It's going to inform your marketing.
00:27:25
Speaker
If you're very successful at winning this particular client type,
00:27:30
Speaker
That's pretty much the client type you should be going after, right out in the marketplace.
00:27:35
Speaker
So I would say first, understand your current clients really intimately beyond the annual meeting and things like that.
00:27:43
Speaker
Second, take a look at the data you're capturing.
00:27:45
Speaker
Does that match the understanding you want to have with your clients?
00:27:48
Speaker
When you go to look at your clients, by the way, you're going to figure out these gaps that maybe you don't know as much as you would like to.
00:27:54
Speaker
That's going to now change your business process in the data capture.
00:27:57
Speaker
Yeah, expand that data set is what you're saying.
00:28:00
Speaker
I'm going to expand that data set or I'm going to capture.
00:28:02
Speaker
I've got gaps.
00:28:03
Speaker
I want to close those gaps.
00:28:05
Speaker
I want to be able to really understand this much more closely.
00:28:08
Speaker
So first, basically get a feel for your client base.
00:28:12
Speaker
Second, close out the gaps, figure out the data that you want to be able to capture and start capturing it.
00:28:17
Speaker
And then third, act upon that.
00:28:20
Speaker
Don't just capture the data for digital hoarding purposes.
00:28:23
Speaker
Really come up with how am I going to use this moving forward?
00:28:26
Speaker
How am I going to use this to deepen the relationship with the client?
00:28:29
Speaker
Do I know all my clients' kids?
00:28:31
Speaker
Have I met them?
00:28:32
Speaker
Have we done a family financial planning session?
00:28:35
Speaker
That's a novel idea.
00:28:36
Speaker
You know, have a conversation with the parents about what is gonna happen eventually.
00:28:40
Speaker
You know, do we wanna have your kids come into that kind of conversation?
00:28:43
Speaker
There's so many opportunities that you can drive from knowing your existing client base really well.
00:28:49
Speaker
And then when you do ask for a referral, instead of just saying, would you happen to have anyone that you could refer me to in your social circle, you can be even more targeted in that.
00:28:58
Speaker
You know, we do really well with folks like yourself, Bill,
00:29:02
Speaker
that are in this economic echelon or live in this particular town or have this particular profession, do you happen to have anyone else you could refer me to like that?
00:29:11
Speaker
That's going to cut down on the misses you have too, right?
00:29:15
Speaker
So the clients that you get referred to, but they're not your ideal client.
00:29:19
Speaker
And then you're in that sticky situation of how do I tell my client that the referral they gave me may not be the best fit for me.
00:29:28
Speaker
You can avoid that by just saying, hey, this is the ideal client that I'd love to talk to.
00:29:32
Speaker
Do you know anybody like that?
00:29:33
Speaker
They're not going to refer someone who doesn't fit that model because you've asked.
00:29:37
Speaker
That's a great point.
00:29:38
Speaker
Well, John, I want to thank you for joining us today and sharing your insights.
00:29:42
Speaker
And it points to the fact, and I think you've made this very clear in your comments, that we have got to evolve and think differently about how we conduct business as RIAs and advisors if we want to remain competitive and grow.
00:29:55
Speaker
Thank you very much, Bill.
00:29:57
Speaker
So to recap, here are a few things I think are valuable for firm leaders and advisors to take away from today's conversation.
Conclusion and Call to Action
00:30:05
Speaker
First, make sure you understand your client base and how this can inform your growth strategy.
00:30:12
Speaker
Second, look at your data with an eye towards closing any gaps between what the data is telling you and the client experience you wanna create.
00:30:21
Speaker
And third, use what you've learned to deepen your relationships with clients.
00:30:27
Speaker
We hope you enjoyed today's conversation.
00:30:30
Speaker
And if you like what you heard, please take a moment to subscribe and follow us on social media.
00:30:36
Speaker
Thanks for listening and watch for our next episode where we'll bring you more insights and actionable ideas to help you grow your business.
00:30:45
Speaker
And remember, the challenge is yours to capitalize on what the future offers.
00:30:55
Speaker
If you want to join the conversation or connect with us, please visit us at synergize.advisorevolutionsciences.com.
00:31:04
Speaker
This content is provided for general information purposes only.
00:31:07
Speaker
The views expressed by non-affiliated guest speakers are their own and do not necessarily reflect the opinion of Trade, PMR, or its affiliates.
00:31:16
Speaker
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00:31:25
Speaker
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00:31:28
Speaker
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00:31:32
Speaker
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00:31:36
Speaker
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00:31:37
Speaker
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00:31:44
Speaker
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00:31:51
Speaker
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00:32:02
Speaker
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00:32:05
Speaker
For a transcript of this episode with sources, visit synergize.advisorrevolutionsciences.com.