Applying Technology to the Financial-Planning Industry

Financial planning services have long been geared towards the people that require the least financial advice—people who often satisfy the minimum investable assets requirement. This misses out on a huge opportunity for firm growth, as the people who satisfy these thresholds are not typically the people who are actually in the market for workable financial planning advice.
Those high net worth clients are categorized as having, at least, $1 million in investable assets. There are the firms that work with lower account minimums—often requiring minimums of at least $250,000. These account minimums differ between firms, but often, established, skilled financial advisors require higher minimums before they accept a client.
Why have account minimums? This is an issue of supply and demand. Every financial advisor comes with a finite number of labor hours. Only so many meetings per day, place so many calls, and still have time to monitor their clients’ portfolios and make timely recommendations. This means that there is a maximum number of clients an advisor can adequately serve. Labor is not infinitely scalable—every financial advisor has a client limit—and how do they maximize revenue and profit? This is how account limits were established, and the focus on high net worth individuals comes from.
When a financial advisor reaches their limit, they try to scale growth in their firm by hiring more advisors. This increases labor expenses, but if the new advisor maximizes their labor capacity, you will see growth in revenue, but slower increase in the profit margin. This demonstrates how the financial planning industry has a scalability issue.
This is where financial planning software solutions come in, specifically for wealth management professionals. These B2B solutions help advisors battle against the need to scale their firm. Tools that offer automation for different basic processes under the wealth management industry umbrella are especially useful to free up advisor’s time and add labor hours to revenue generating tasks instead.
This allows financial advisors to increase productivity and, in theory, serve more clients.
Historically speaking, one of the biggest keys to success in investment strategy is defining, perfecting, and following a repeatable process. In wealth management, the successes aren’t any different—define a client’s goals, a process to attain those goals, and execute. There is no doubt that financial planning is an intricate process. But allowing the technology available to craft and equate the processes behind wealth management and financial planning maximizes profit margins and decreases labor costs—allowing the financial advisor more time to serve better more clients.