As you might imagine the answer to this question will vary by investor and financial advisor. When some level of normalcy returns to the marketplace an unknown percentage of investors will want to return to meeting face-to-face with prospective financial advisors. An equally unknown percentage will have been made comfortable with a new online method of screening, selecting, and communicating with their financial advisors (prospective or current).
When financial advisors and investors are in the same city, and there is no Covid, there can be a choice between traditional and virtual interactions. When they are a significant distance apart the only option is virtual with the possible exception that some investors and advisors are willing to travel long distances to meet face-to-face with each other.
The bottom-line is financial advisors will have to be skilled at marketing their services using traditional and virtual tactics. The traditional method that is based on face-to-face contact and the virtual method that is based on digital marketing, the Internet and Zoom. It stands to reason the most productive advisors are prepared to offer their prospects a choice that is based on location and method of communication.
Close Ratios
Let’s face it, until Covid disrupted our lives and ways of doing business, most financial advisors were more comfortable with traditional marketing. We believe that is because it maximized the impact of their sales and relationship skills. They closed more new clients when they were in face-to-face meetings.
What if their virtual close ratios are significantly lower than their traditional close ratios? This would be a very disruptive outcome for financial advisors who are currently adding new clients to their practices. They would have to figure out a way to use old tactics in a virtual setting.
Two Game Changers
You could say Covid is a game-changer when it requires financial advisors to develop new marketing tactics. As noted, if the advisors are less comfortable with virtual marketing then their close ratios will suffer.
On the other hand, Covid is not the only game changer. The other powerful force is the Internet and how it gives investors access to information about financial advisors. Plus, the Internet makes virtual marketing possible when you consider technologies like Zoom and other online communication tools.
How Investors Select Financial Advisors
Why will some investors prefer a traditional process when they select financial advisors? There are a lot of reasons, but we believe these are the three most important ones.
First, that is what they are used to. They have always had traditional relationships with financial advisors in the past and that is what they want in the future. The same is true for other professionals (CPAs, attorneys) they depend on for specialized advice and services.
Second, they believe they will make better decisions if they meet with prospective financial advisors face-to-face. All too often investors select the advisors they like the best. This subjective decision process is facilitated by meeting advisors face-to-face. This is a flawed process that may be based on the mistaken intuition of investors. Objectivity produces better results.
Third, face-to-face contact makes it easier to build relationships between professionals and their clients. And, this is a relationship business that is based on clients’ money, achievement of goals, and financial security. Investors want the comfort of knowing their financial advisors know and understand them.
Does any of this have anything to do with the quality of financial advisors? Absolutely not, traditional is simply a different method of communication that is up against the long-term relationships that have existed between investors and advisors.
The method of communication does not impact the expertise of financial advisors. The method of communication does not impact the trustworthiness of financial advisors. If anything, virtual helps investors make more objective decisions because they are less impacted by the personality and sales skills of the financial advisors.
The Medical Equation
More and more medical advice is being dispensed over the Internet and telephone. If this is good enough for peoples’ physical well-being it should be good enough for their financial well-being. However, the key point is not the relationship between health and money. It is more about the way people communicate and the past versus the future.
Will the future be like the past? Again the answer is absolutely not. The future will be nothing like the past because the past was limited by out-of-date technologies that are currently obsolete. It is like comparing transportation before and after the development of jet aircraft for commercial air travel.
Why be limited by out-of-date methods of travel? In particular over longer distances. The same can be said for the methods of communication.
Mutual Convenience
Another perspective is the mutual convenience of modern communications. Investors and financial advisors both benefit when they don’t let themselves be limited by the past.
Convenience is more than just traveling to and from investor and advisor locations. The person doing the traveling has always been disadvantaged the most. Consequently, a high percentage of financial advisors adopted policies that required investors to travel to their locations. Of course, that did not always work based on the work status and location of the investors.
Marketing Versus Servicing
Just about every financial advisor has remote clients that they service virtually. The number one reason for this reality is clients relocate to distant cities, but retain their current advisors. This should mean these advisors are already comfortable communicating with clients in a virtual environment. All they have to do is transfer this method of communication to their marketing practices. Numerous technologies make this possible.
Location should not matter in the information age, but it will take some different business practices.
Offer Prospects Choices
At least in the short-run, financial advisors should be considering new options when they interact with prospects. Step one is offering investors a choice when it is applicable.
Are they comfortable with a virtual relationship or do they prefer a traditional relationship? Do they prefer a virtual relationship at least until Covid is no longer a risk? If they choose traditional, what would it take for them to be comfortable in a virtual relationship.
At the end of the day, virtual is just another way of communicating that produces a lot of efficiencies and benefits.
