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GeoWealth – 2023 Market Outlook

Technology is Critical in Providing the Ultimate High-Touch Client Service

by Colin Falls, President at GeoWealth, an enterprise technology and TAMP built for the needs of the modern RIA

January 9, 2023 – As 2022 winds down, advisors and their clients have added ‘positive market performance’ to their holiday wishlists. A steady drumbeat of negative events has applied continual pressure on the markets, with many experts predicting more of the same for the coming year. The Federal Reserve and other central banks have been combatting inflation with interest rate hikes which are beginning to temper rising consumer prices. It’s too early to know whether the hikes will result in broad layoffs or a recession, but regardless, it is creating an ominous outlook that has clients feeling increasingly anxious. Savvy RIAs are taking note, seeking technology partners that can free them up to spend more time directly supporting their clients.

An advisor-driven, tech-enabled TAMP can be the solution, allowing firms to spend more time tackling critical client services such as planning for major life events and assuaging fears when bear markets rear their ugly heads. What benefits can a forward-thinking TAMP bring to the table, as RIAs seek to balance evolving high-tech solutions with high-touch advisory services?

First, think about how declining markets can impact profitability. During downturns, an RIAs total number of clients and accounts serves as a useful indicator of future growth, especially when considering operational costs. As a firm adds clients, the volume of trades can quickly spiral out of control, placing an unnecessary burden on advisors. As clients are onboarded, the number of daily trades increases. Whether in the form of new investments or maintenance trades, recurring events such as regular contributions to or distributions from retirement assets can account for as much as 80 percent of trade volume. Embracing an outsourced trading partner when it comes to maintenance trades can help to reduce human error, improving accuracy while reducing fixed costs and boosting your bottom line. Most importantly, it gives advisors back valuable time to focus on client-facing activities.

There is also the great wealth transfer to consider, with the baby boomer generation expected to pass along an estimated $68 trillion in assets to their children over the next two decades. Tech that brings authentic benefits to advisors and their clients can help attract the next generation of investors to your firm. While the benefits of technology extend beyond one’s age, the next generation is looking for more than just investment performance. Baby boomers may have more immediate income needs, but younger generations may care more about where their money is invested along with its impact on society. If RIAs are relying on archaic manual processes, they risk being left behind by forward thinking investors from Millennials to Gen Z, and of course, generations to come.

This coming year, best-in-class solutions will function as a true partner and consultancy for advisory practices. Regardless of market conditions, they’ll serve as an extension of the team, alleviating the burden of day-to-day operations and the subsequent cost of staffing those back-office teams.

Technology can free your advisors to provide the ultimate level of service and scale your practice, while leaving burdens, like the dismal market performance of 2022, in the rearview mirror.

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