From Handshakes to Hashtags: The New Rules of Advisor Engagement

Author: Ben Cukier | Co-Authors: Jack Babbush, Avantika Bagri

Acquiring clients has become the greatest challenge for financial advisors in today’s competitive landscape. With over $114 trillion in advised assets across the U.S., even modest improvements in client acquisition can translate to substantial revenue growth1. As client expectations evolve, advisors who limit their focus to traditional financial planning and investment advice risk falling behind. Increasingly, advisors face pressure to deliver broader and more personalized financial planning services to retain and win clients. Today’s clients expect more than investment management; they seek ongoing holistic guidance that regularly includes tax planning, healthcare advice, estate planning, and more. Advisors must be prepared to serve as comprehensive financial strategists, offering broad value across all areas of a client’s life and accomplishing this time-consuming service cost-effectively. Simply put, the days of traditional handshakes and portfolio reviews are over.

Most advisors include more than a dozen topics in their financial plans – a dramatic rise from prior years – reflecting the growing client demand for more financial planning depth and breadth2. Of advisors whose clientele is primarily over 55, about 50% prepare these extensive financial plans2. Meanwhile, 75% of advisors who primarily serve a younger client base – mostly Gen X and Millennials – prepare these extensive plans, reflecting a growing trend of clients expecting more depth and detail in financial planning2. Collaborative planning and ongoing, timely, proactive engagement have become essential as clients increasingly expect tailored advice and seamless, tech-driven experiences. To meet these expectations and remain competitive, advisors are leveraging technology to scale efficiency and enhance their offerings.

Innovative solutions are already delivering tangible results. For instance, firms leveraging behavioral finance tools attract three times more assets from existing clients than those that do not3. Additionally, firms that frequently utilize digital tools spend 20% less time on client operations and 10% more time on client service3. These technologies are not just tools; they are catalysts for growth, engagement, and long-term success. As advisors seek to acquire and retain clients in this evolving landscape, investing in AdvisorTech engagement tools is no longer optional – it’s essential.

There are three things an advisory firm can do to grow its business: bring in more clients, increase revenue generated per client, and service clients more efficiently. However, today, advisors face key pain points in achieving these objectives effectively:

  1. Ineffective Client Acquisition & Retention: A Morningstar Advisor Insights Survey found that most advisors ranked “growing the business via more clients” as their most important goal. However, most advisors also ranked “acquiring new clients” as their number one challenge to growing their business4. An FIA Benchmarking Study showed that referrals account for a majority of new client acquisitions for firms, yet fewer than 50% of firms offer documented referral plans4.  Moreover, referrals alone aren’t enough to sustainably grow in a crowded landscape. Advisors will need to invest in both digital and traditional marketing strategies to effectively differentiate their key value proposition to achieve sustainable organic growth. 
  2. Disconnect Between Client Wants and Advisor Offerings: Over 90% of clients say they want estate planning advice from an advisor, but only 22% receive it, according to the 2023 RIA Benchmarking Study by Charles Schwab; 89% percent of clients want tax-planning advice but 25% receive it, based on industry research; and 87% want charitable or philanthropic planning services, but only 2% get it from their financial advisor5. Being able to provide clients with the services they want is key for client acquisition and retention and for the ability to generate more revenue per client.
  3. Time Constraints: Growth is constrained by an advisor’s availability to add more clients without harming the existing client experience. Despite technology improvements that automate routine administrative and back-office tasks, the median ratio of clients per advisor has remained constant6. The average client acquisition cost of a financial advisor is $3,800 per client, with over $2,700 of that attributed to the cost of an advisor’s time7. If advisors focus on the highest value activities, they would not only be able to service more clients but also save money by having lower value-added activities automated or performed by lower cost labor.

Solutions as a Catalyst for Growth
To address the challenges advisors face, AdvisorTech companies are developing tools that aim to lower the cost of acquiring clients while improving client satisfaction and long-term engagement, increasing the services an advisor can provide, and letting an advisor manage his or her clients more effectively. Some key areas of innovation include:

1. Ways to Enhance Client Acquisition & Retention:

  • Digital Marketing: Comprehensive tools that integrate content, data analytics, and automation to craft and deliver personalized marketing campaigns across multiple channels (email, social media, content marketing, etc.). These platforms track engagement metrics (click-through rates, time spent on content, lead conversion rates) to optimize campaigns in real time, ensuring advisors target and acquire clients more efficiently.
  • Lead Generation: Advanced algorithms and data-driven platforms that match potential clients with advisors based on specific criteria such as investment needs, risk tolerance, life stage, or geographic location. These tools provide high-quality leads by targeting ideal client profiles through social media, SEO, and tailored content marketing strategies, helping advisors reduce time spent on cold outreach. These tools also help advisors manage and process these leads.
  • Referrals: Tools that help advisors create consistent referral programs, streamline the process of leveraging client networks to generate new leads, and grow assets under management.
  • Behavioral Finance: Tools that analyze client behavior through data collection on spending patterns, risk appetite, and psychological triggers (e.g., loss aversion, social responsibility preferences like ESG investing). These platforms provide insights that help advisors customize portfolios and advice based on client behavior, improving satisfaction and engagement through a deeper understanding of personal financial decision-making.
  • Flexible Billing: Systems that allow advisors to offer multiple fee structures beyond the traditional assets under management (AUM) model, including subscription services, hourly rates, or one-time or episodic billing. These models cater to a wider range of client preferences and financial situations.

By adopting these tools, advisors can attract new clients more efficiently, leverage existing client networks for growth, and provide tailored experiences that enhance satisfaction and retention.

2. Connecting Client Wants and Advisor Offers to Generate Revenue:

  • Specialty Planning: Platforms that allow advisors to integrate additional services such as retirement planning, healthcare cost projections, trust and estate reviews, tax optimization strategies, charitable donations, stock option strategies, etc.
  • Held Away Assets: Financial technology solutions designed to help financial advisors manage, monitor, and optimize assets that are not directly custodied by their firm. These tools allow advisors to integrate and oversee external accounts such as 401(k)s, 403(b)s, or other retirement and investment accounts held outside their primary management platform. 
  • Alternative Assets: Platforms that provide advisors with streamlined access to a wide range of alternative asset classes such as private equity, real estate, and hedge funds, helping diversify client portfolios beyond conventional investments. 
  • Insurance Planning: Tools that allow advisors to incorporate life insurance, annuities, and long-term care products seamlessly into retirement and wealth management plans. With features like needs assessments, product comparisons, and digital policy management, these tools help advisors offer holistic financial advice.
  • Next Best Action: Tools that allow advisors to identify personalized opportunities for each client to improve their financial lives, from the analysis of client data to alerting the advisor and the client, through education and bite-sized advice to fulfillment. 

These solutions enable advisors to offer a wider range of high-value services to help implement the financial plan, optimize client financial lives, and address unmet needs, ultimately increasing client touch points, and through deepening client relationships, enhancing both client revenue and retention rates.

3. Saving Time:

  • Client Portal / CRM: A comprehensive system that centralizes all client interactions, from onboarding and document sharing to goal tracking and performance reviews. These tools offer customizable dashboards for clients to access real-time data on their investments, financial plans, and personalized insights, while also allowing advisors to manage tasks, track communication history, and send automated updates, improving client engagement and satisfaction.
  • Proposal Generation: Platforms that allow advisors to design and deliver highly customized, data-backed investment proposals, integrating client-specific financial goals, risk profiles, and portfolio analytics. These tools automate portfolio comparisons, tax optimization strategies, and performance projections, enabling more effective client presentations that streamline decision-making. 

With these tools, advisors can automate routine tasks, streamline workflows, and focus more time on building relationships and delivering value, ensuring scalable and efficient growth.

Learning from Leaders in the Space8

“I think a big issue is that advisors are facing a silent pricing pressure by having to add more services to their clients in a cost-effective way. The investment problem is solved, but the investor problem is ongoing. The top advisors I witnessed have built incredible processes to automate the easy stuff so they can work on the more complex issues. This leads to happier clients, more referrals and smart advisors doing productive and fun work for their clients.”

–Alex Potts (President, Buckingham Strategic Partners)

“The wealth management profession is on an inexorable trend away from product-centric towards client-centric advice. Some of this is driven by regulators, some by evolving consumer expectations. Fortunately, the tools now exist to make the promise of client-centric advice delivery a reality. And a whole new category of Gen-AI enabled solutions is emerging that will expand the opportunities even further.”

–Anton Honikman (CEO, MyVest)

In summary, adopting innovative AdvisorTech solutions is essential for meeting evolving client expectations and delivering the personalized, tech-driven experiences that today’s clients demand. These tools empower advisors to overcome challenges in client acquisition, provide broader and more comprehensive services, and operate more efficiently. By embracing these advancements, financial advisors can position themselves for long-term growth and remain competitive in a rapidly changing landscape. The future of financial advising belongs to those who invest in technology to future-proof their business.

Are you building innovative solutions in the AdvisorTech space? We’d love to collaborate and explore how we can shape the future of financial advising together. Reach us at bcukier@centanagrowth.com, jbabbush@centanagrowth.com, or abagri@centanagrowth.com.

[1] Investment Adviser Association. (2023). Investment Adviser Industry Snapshot 2023.

[2] Inveen, D., Lurtz, M., & Kitces, M. (2022). How financial planners actually do financial planning. Kitces.

[3] Charles Schwab. (2023). 2023 RIA Benchmarking Study

[4] Morningstar. (2019). Morningstar 2019 advisor insights survey.

[5] AssetMark. (2023, June). Why investors leave their financial advisors and how to improve retention.

[6] AssetMark. (2023, June). Henry-Moreland, B. (2024, January). Advisors are becoming better (not “faster”) with advances in #AdvisorTech. Kitces.

[7] Kitces Summit 2024

[8] The quotes provided are for illustrative purposes and reflect personal opinions. They should not be interpreted as endorsements of any specific company or business model.

DISCLAIMER

The information contained herein is for informational purposes only and should not be construed as investment advice or an offer, solicitation, or recommendation to buy or sell any security or investment product.

This communication is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or investment product

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