Mitchell Rock, a senior vice president at Morgan Stanley, checks his smartphone while visiting the company’s office in Boca Raton, Fla.

John Van Beekum • New York Times ,

Digital tools: Help or hindrance for financial advisers?

  • Article by: paul sullivan
  • New York Times
  • April 19, 2013 - 5:10 PM

We use technological shortcuts for ­simple tasks like booking vacations and buying books, and for more consequential matters like searching for a new home or diagnosing our ailments.

But is the technology good enough to replace guidance from financial advisers? Or is technology actually good for advisers because they can use it to do their jobs better?

Several new reports look at what technology will mean for an adviser, who, at his or her best, protects people from their worst investment ideas. And that brings up a corollary question: What will this trend, and enormous investment, in technology mean for the clients, the people whose money is at stake?

It seems almost heretical to propose that technology will not make a service better. But after reading the reports and talking to advisers who have embraced technology, I am not sure that this emphasis is going to be better for clients.

The report from Accenture looked at how younger clients sought relationships through technology and how advisers had to be available to provide it.

“When we talk to firms, they think social media is a new thing, and they’re trying to control the risk of it,” said Alex Pigliucci, global managing director of the wealth and asset management business at Accenture. “I see these tools as an advantage today.’’

“The Out-of-Sync Advisor,” a report by Deloitte, imagined technology bringing clients who were managing their own money back to advisers and then allowing those advisers to give people with a couple of hundred thousand dollars the type of high-quality advice reserved for people with millions or more.

Ed Tracy, leader of the wealth management and private banking practice at Deloitte, said this would be possible only if all the clients’ financial information was already in the system so the advisers could spend their time together talking about the clients’ goals.

But is there any practical value to investors in this push for more technology? In some areas, yes. In others, it remains to be seen.

Patrick O’Connor, senior vice president for wealth, retirement, portfolio solutions at Raymond James, said some of the best technological innovations reminded him of a recent visit to his new dentist.

Instead of pointing to a murky X-ray and telling him to floss, his dentist wheeled around a monitor that showed his teeth — and the problems with them — from various angles. A bit more brushing here and flossing there, and the image changed to show healthier teeth.

“She was giving me more ownership of my teeth,” O’Connor said. “I’ve been much more diligent about flossing and paying attention to those areas. Before, I would have ignored her.’’

Technology, he said, can do much the same thing for investors, showing them how they are doing and the consequences of their spending and saving.

Yet when it comes to social media, it is easier to see how technology can go awry. My first worry was an adviser sending off a Twitter post after a night on the town; my second was an investor acting on that post.

Firms worry about that, too. O’Connor said a compliance officer checks advisers’ comments before they are posted.

Angie Herbers, who runs a research and consulting firm named after her that is aimed at independent advisers, said that she is not convinced that social media brings in more clients and might be more of a liability to established clients.

“The risk is you can imply something that you don’t wish to imply to clients or future clients,” Herbers said. “Let’s say you tweet out a great article and some of your clients read it. You have no control over how they react to it.”

Advisers, she said, “are on social media to educate clients or potential clients, but I believe they’re creating more stress than anything else.”

Pigliucci disagreed, arguing that social media can help clients understand complicated products on their own time. “If it’s really working well, it’s more than some tweets and Facebook postings,” he said. “If the adviser sends a message and then says, ‘Here’s a link that discusses the strategy I’m talking about,’ and you can look at it and think about it a bit more, it’s interacting using online education.”

Mitchell Rock, a senior vice president at Morgan Stanley, was in the first group that the company allowed to use social media in 2011. He said it had been an additional marketing tool for his group, though it had not replaced in-person meetings or even cold calling.

“We don’t use Twitter because we’re limited to sound bites,” he said. “LinkedIn has been very effective. It allows you to position yourself and drive prospects from your Linked­In account to your website to your desk.”

While social media have been good to him, Rock was measured on their usefulness to clients. “Social media has allowed us to cast a wider net and get in front of our target market, but it’s still important to have a strong idea to deliver,” he said.

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