Michael Kitces is a partner and the director of research for Pinnacle Advisory Group, and publisher of the financial planning industry blog Nerd’s Eye View. We recently sat down with him to discuss how new technologies are changing the financial planning industry.

What processes or paperwork take up the most of your time?

Simply put, I find the paperwork-related process that takes the most time is anything that requires looking up and finding a piece of paper we have handled in the past. In a world where most of us have become accustomed to the natural time it takes to walk down to a file room, pull a file, search through its various folders and subfolders to find something, retrieve what we wanted, and take it back to our desks — and repeat the process many times throughout the day — the sheer efficiency of electronic document storage is astounding. It used to take minutes to find documents and files, and now it takes seconds. While that doesn’t seem like a lot of time to save, it really adds up throughout the days, weeks, and months of the year.

From there, the secondary benefits and efficiencies quickly start to emerge. Suddenly, a question from a client isn’t “let me pull your file and look into that and get back to you,” it’s “let me pull that up on my screen and we’ll look at that right now.” The number of phone calls and follow-up phone calls declines. Client service is improved as the staff become more responsive and capable of answering questions immediately, the first time, without callbacks or putting people on hold while files are chased down.

As the office grows, we’ve found that electronic document storage improves intra-office collaboration as well. Files that one person touches and works on can be made available immediately to others. The challenge when someone can’t find a client file to work on because another staff member already has the file is no longer a blocking point. An effective document storage system quickly becomes a central resource for the entire office, and the more people there are who interact with a client, the more it helps.

How are technology and social media changing the financial planning industry and specifically how financial planners like yourself interact with your clients?

The rising integration of technology into the practices of financial advisors is allowing us to become more efficient than ever, as we let computers do what computers do best so that we, as humans, can focus on what we do best. We need fewer investment staff to calculate rebalancing trades that software can now do and fewer staff to file, store, and retrieve documents in a paperless world.  We have more capability to stay in touch from our business wherever we are, cutting down on the time going from one location to another as we often don’t even need to be there anymore. 

Instead of just trying to find ways to delegate tasks, we’re making the tasks unnecessary altogether, which ultimately leads to a drastic improvement in the efficiency of the firm and a chance to focus staffing more on the key client-facing activities that drive value to the client and success for the firm.

The growth of social media represents a unique opportunity in this regard — a chance to let advisors demonstrate their expertise and let prospective clients find their way, rather than the far-more-difficult approach of seeking out clients one at a time. Social media opens the door to establishing an inbound marketing strategy for financial advisors, which makes it feasible to build successful niche businesses in a manner that simply wasn’t possible in the past, and gives planning firms a new way to differentiate themselves at the very moment that planners are experiencing a crisis of differentiation.

What technologies, such as mobile, have you implemented in your business, and what gains or improvements have you seen? To what extent are they integrated?

Our first key step in supporting a more mobile team of advisors was to configure secure VPN connections to allow those who were out of the office to connect back to their office computers and gain access to all of the applications and files that they were accustomed to using. We determined that this was a more secure solution, given the critical and private nature of the client data involved, than simply loading information directly onto laptops or mobile devices for staff to take with them. And of course, overall, having an electronic document system for client data and information on the road lets us rely on a more robust set of security tools than just carrying around physical files!

While VPN-based connections allow us to effectively interact with central client information from a laptop or home office desktop, though, the usability on tablets and smartphone devices is still less than optimal. In the coming months and years, we will be looking at ways to integrate access to remote client documents and information on a wider range of mobile devices, including the potential to capture signatures on new paperwork electronically and further streamline our paperless office workflow.

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