2024 Advisor Digital Trends: J.D. Power Insights on Thriving Through Ease and Efficiency With Craig Martin

Welcome, Craig.

Craig Martin: Thank you, Doug. Pleasure to be with you.

Doug Heikkinen: The study highlighted ease of doing business to stand out. Can you elaborate on what that means for advisors and asset managers, specifically when it comes from digital interaction?

Craig Martin: Yeah, I start with kind of the simpler definition, and this is what we hear all the time, you know, time is kind of the most important commodity to advisors, you know, how much time they have available to do their jobs, and most importantly, to engage with their clients.

So from an ease of doing business, it's really about how do you make them more efficient, more effective, and [00:01:00] give them more time to spend with their clients in a more meaningful way. And where digital fits in, it's got a couple of key roles. One is giving them information. Obviously, there's lots of new tools and capabilities, but it's really helping them to have the right information at the right time, so that they can act accordingly with their clients, whether, you know, when it comes in the asset management world, a lot of it is about, what's going on right now, what's important, what's top of mind for their clients and for, the folks that they want to talk to, and making it easy to get to that information, and also making that available to their clients in a way that, if it's something that they can distribute or give to them, it's really about saving time, it's really about saving effort at the heart of it.

Doug Heikkinen: Yeah, let's start with asset managers. What can they do to up their game for advisors?

Craig Martin: Well, there's kind of a two parter in this. One is, it's really about making it easier. And that really starts with a good digital experience. And we've got a team that's worked across [00:02:00] industries for over a decade. And really they have laid out kind of a basic framework, what we call our digital hierarchy.

You start with foundational things. Does it have the right look and feel? Is it easy to access the information? I can log into this system. And then it starts to be, how do I kind of navigate around the site? I mean, are judging digital in many regards by, their broader experiences.

And so, I turn to digital and I go to those sites to get easy access to information. And it's got to be kind of designed in a way that, understands how I want to access information, how I want to log in. Taking away all the normal barriers. I mean, again, people are, they have a habits and framework of how they know websites should be structured.

Whether they know it or not, they're being influenced every day by their bank accounts, their insurance, their utilities, all those experiences frame up how they expect to interact. So understanding those, making sure the sites are designed in a way that's easy to use and easy to navigate based on the inherent, [00:03:00] design expectations that a consumer has.

The other critical part is the human side, which oftentimes people kind of lose sight of, which is you have to help people see the value. Asset managers really need to spend time thinking about how do you educate and reeducate what the value is of digital? How do you find the most important information?

Oftentimes whether it's a wholesaler or other, outlet is trying to communicate, Hey, look, let me show you the greatest and latest things that we have available to you. But forget that, most of the time that advisor is on their own. So you have to show them how they can kind of quote unquote, fish for themselves, so to speak, and really go out and understand how to use the site.

Where's the value? Where do you navigate? Because, repetition and, regular engagement really improves perceptions of digital because they know where to find things, they know how to navigate, and it becomes easier and more user friendly for them.

Doug Heikkinen: Last year, data from the study suggested that digital innovation had stagnated, which is [00:04:00] really surprising.

Has that improved at all? Why or why not?

Craig Martin: Yeah, so we are seeing some improvement, particularly driven, you know, the way our studies are designed, we do an industry average and it's based off of kind of the largest market share firm. So big players are going to have a bigger or more outsized influence on the movement of sites and the ratings of those sites.

we've seen improvement, but I would say there's still a long way to go. Part of the challenge is, investments are always being made, but how do you communicate those back? And how does it align? I mean, so many times firms are trying to catch up. They're trying to, develop things.

And oftentimes, that work and effort is done in a bubble. They aren't going out and asking their clients, i. e., in this case, the advisor, what do they need? How does it need to look? We've heard a lot of firms have spent a lot of time just kind of catching up. And so the realities of digital, the expectations are always rising.

So that's the hard part. It's not that investments aren't being made. It's not that improvements aren't being made, [00:05:00] but rather they're getting, you know, that bar continually rises. And so if you're not actually going even faster and jumping ahead, you're actually falling behind in the end users mind. Our studies are all about perception. So it's not that they're not making improvements, but are they keeping up with the speed of improvements more broadly and how impactful their solutions are to their end clients, the advisors.

Doug Heikkinen: Digital is important, but so is the human element, like robot advisors taught us.

How can advisors go about finding the right blend for themselves?

Craig Martin: I think they have to really evaluate and be self aware of what their value proposition is to their end consumer, their end client, the role of digital is really evolving and it's tied, you mentioned RoboAdvice.

What was the core value prop? Robo it hasn't gone away, but it's gone away in the sense of replacing an advisor. The advisor's personal connection, human connection is more important than ever. It's more [00:06:00] powerful than ever. Really understanding your client's needs and wants and being able to deliver solutions that are aligned to that, vitally important.

It's what's going to differentiate going forward. The issue is technology is moving so fast and can enable so many things. It's pairing the two together. You know, we've seen a couple of different things that, that show up there. One is how effectively do you communicate digital capabilities and how are you going to use them?

So as an advisor, you're looking for your client to self serve more. Now they want to self serve more. At midnight on a Saturday and they're worried about their portfolio. You want to give them access so they can kind of calm their nerves, see their information. You don't need them to try to call you or text you in the middle of the night.

You can give them access. So. explaining, communicating where they can access information, how they can make basic updates. A lot of people, Hey, I want to, I need to make a small update or an adjustment. Yeah, I did this the other day. I was updating my beneficiaries. I don't need to call you up and spend a bunch of [00:07:00] your time.

It's not valuable for you. It's something that I may want to do on the side when I'm sitting around in my car for five minutes when waiting on my kids to get in the car. So. Enabling that is really important. The other part is how does it save me time and effort? And how does that make each interaction more valuable?

If I can communicate and use these tools to give information proactively. Let people know things in advance that frankly, I can then spend my time listening to my clients, understanding how things have changed. What updates do I need to make? How can we talk about what's really important to them and what's on their mind?

Again, technology has this ability, we're hearing a lot about AI and generative AI. A lot of what we're seeing now is like meetings and capturing information. So rather than me spending all my time taking notes or really being focused on capturing that, AI can do all that for me, summarize the meeting notes, send a follow up, do all these tasks for me that quite honestly are not really value add from an end consumer standpoint.

So anything I can take [00:08:00] away, and offload to the digital side gives me more value to my clients because I'm more present, I'm more engaged with them and truly demonstrating, the value that I bring as an advisor to them.

Doug Heikkinen: Is there anything asset managers can do to help advisors find the right blend between digital and human interaction?

Craig Martin: First answer is yes, absolutely. I mean, part of that gets down to, one of the, important things for us is helping them communicate what the value is, how needs are being met. And I think this is so important because asset managers, if you ask the number one answer is always going to be investment returns, you know, what, what's the differentiator? Oh, we have great investment returns. Well, if everyone's saying that what's truly relevant, what's meaningful in terms of investment returns, what does that actually look like?

Everyone's got different risk tolerances, had different desires, goals, objectives. So the ability to help kind of take the products and services you have, and better communicate to the end consumer, why is it valuable? Why is [00:09:00] it meaningful to them? How does it resonate with their life? What, you know, people's goals, we kind of joke sometimes it's like, my goal is to retire at 65.

That's not really a goal. I mean, it is, and it is not. But if you say, Hey, I want to retire at 65 or do Monte Carlo analysis, I can run all the numbers. What better advisors are doing is having this discussion of what does that look like for you? My retirement at 65 could be very different than someone who's, the CEO of a fortune 500 company.

What are they trying to do? What does my family want to do? Where do I want to live? What's important to me? And so the products and solutions, you know, getting, a couple of basis points, better return on something doesn't necessarily meet that need. So I think asset managers, while they keep talking about better returns, it's being able to connect the dots to get, what are my fears?

What are my concerns? What are my wants and needs? And how do those products kind of become more personalized to the individual? How does it, address kind of. The downside and [00:10:00] upside, of that, because market conditions are going to drive how the portfolio performs and how the investments, in the end are going to do.

A lot of consumers have been taught, you can't beat the market. So what are they actually getting? What's actually being delivered? Is it truly meaningful? And what do I get out of that?

Doug Heikkinen: Let's talk about wholesalers. To me, kind of still in the starting blocks.

The study indicated that the wholesaler representatives responsible for managing advisory relationships are not doing their part to nurture digital adoption among advisors. What can they do?

Craig Martin: I think part of it is recognizing the role that digital plays and how to position it. So oftentimes, what we've heard is, you know, when we talk to the asset managers and, and, they feel like the wholesaler perceives their pure value as explaining the products and educating and kind of engaging, which is true.

 The key though, is to recognize that they need to just like the advisor with their end client, speak to where does digital fit in. And [00:11:00] think about, if they want to be present, and impacting the life of their advisor clients every day, they're not going to be there every day.

They're not going to engage every day. No one wants that much attention and contact, or at least most don't. So how do you demonstrate the way that digital can play a key role. How do you educate them? Because that's how you add more value. You're showing them not just this one thing, one time, but where do you find information on an ongoing basis?

And then when you come back in again, same concept of like, what's important to you? What are your key clients doing? Hey, let me show you how the technology can help you. Oh, by the way, you're trying to drive more organic growth and you're targeting these folks. Let's talk about this product set and oh, by the way, the market's going to change in six months.

 The elections are coming up. What's going to happen. It's a lot of unknowns out there. You're going to have new questions. There's going to be new topics that are going to be important. How do you find that in another week, another month, another [00:12:00] quarter? So I think really important that. They don't see it as like, Hey, I'm here to give a tutorial on how to use the website, but rather you're giving it in the context of your value.

And I think that's a really key nuance and difference that too many people when they hear, Oh, well, I can't waste my wholesaler's valuable time explaining digital. It's not about doing a wizard tutorial on how to use an app or something. It's really communicating about how we enhance the relationship through these various channels that are available.

How do I give more value to that relationship and become more impactful to their business through the technology that we have available to them.

Doug Heikkinen: I can't believe we've come this far on this podcast and not talking about AI. So, any thoughts on what that might mean for the advisor asset manager relationship?

Craig Martin: Ah, the wonderful word of AI. I mean, it's so massive, and I think that's part of the challenge. And, people hear AI, and I think [00:13:00] everyone's mind typically goes to generative AI, large language models. And I think what's really important about that is contextual to, you know, like, what is it going to do for us?

Just like any other technology. I mean, I've been doing this for decades now, and, there's always another new technology. I think with AI, it's got huge potential and it, a lot of what I've heard is it goes down to efficiency. Now the argument becomes like, okay, if, you know, we've done some research on this and most consumers believe that the primary kind of goal or objective among most financial services firms with using AI is efficiency, i.

e. cost savings. I'm going to eliminate this. It's going to be for the betterment of the company, not necessarily the end consumer. So I think it's important for the firms to be able to communicate, how does it fit? And becoming more efficient is actually good for the customer.

And we touched on this a little bit, but this idea of, you know, some of the new technology that's being made available, [00:14:00] is potentially saving an advisor, an end, you know, user 15, 20 percent of their time in terms of non value add, like data entry, kind of pre filling documents, all these manual tasks that, that are necessary, even running different scenarios, all this technology enables for much better conversations.

So I think having a discussion about what's the true value and enhancement to the relationship that this technology provides, rather than necessarily focusing on, again, I think people get caught up in all these nuances and, most consumers, the average individual doesn't really get all the, yeah, there's so many variations and, and so many

kind of angles that you could think about AI, but I think so much of it really comes down to what is it going to enable me to do? How does it save me time, effort and energy so that I can take that time and really devote it to clients and building relationships in a way that makes them [00:15:00] stronger so I can, you know, in many ways sell more product, but that's a good thing for the client too.

It's like, they've got a gap in their solution set, I'm going to fill that gap. And I wouldn't be able to do that if I hadn't had the right discussions at the right time with the right clients. And that's where I think, broadly AI really comes to bear is being able to help personalize and help save time and effort so that you can improve each of those experiences and engagements with your client.

Doug Heikkinen: Ah, the clients. What does this all mean for the clients themselves?

Craig Martin: I'm really optimistic about what this means for the clients. When you think about if you're getting a better digital experience and you're improving the digital information and they have more confidence, the end advisor has more confidence in their capabilities to find information, answer questions, they can then, instead of having a very transactional discussion, a transactional engagement, and what I mean by that is, very technical in nature.

There's always kind of a wide variety in terms of their personalities and needs and wants, but many of them are not [00:16:00] financially kind of astute. They're not the experts. They're not financial advisors. They've got great skills and they've done, very well for themselves in many cases when they're more affluent.

But that's through their area of expertise. And oftentimes what they're trying to do by working with a financial advisor is kind of take some of the worry and doubt off of them. How does technology enable that? How do you share information in a more timely manner? How do you have a discussion around what's important to them and then use technology to engage and communicate on an ongoing basis,

the information that's really relevant to them. I've been working in financial services for 20 plus years now, and I still see a lot of very transactional product pushing and the consumer doesn't get it. They don't understand, and it may be the right product, but, one of the biggest challenges people don't understand.

And they don't want to look stupid. So they're not going to admit they don't understand. So you go on your way of having these advanced discussions about, backdoor Ross and all these conversions and all [00:17:00] these things. And the person, listening is glazing over. But if you can find, the technology has a way to help them kind of key in on what's important to them.

And then when you're explaining these things, the technical expertise you have can show through and shine because it's positioned back to what's important to that client. And again, technology helps to have those discussions, helps you serve those clients. And also, um, I'm hopeful that it also allows for a broader universe of people to get advice.

I think the financial advice profession is so critically important to the end consumer. And the ability to deliver kind of more meaningful value to a broader universe of people. Again, it can only make the profession better and stronger. So I'm very optimistic about what the technology and the use of technology can provide.

It's just a question of kind of engaging with it and not fearing it as much. I think sometimes people, you know, robo advisors, it was like, Oh, they're going [00:18:00] to take over the world and I'm going to lose my job. It's not that. It's clearly demonstrated that consumers value that personal touch. How does this technology enable us to deliver that more broadly is key.

Doug Heikkinen: Craig, as always, J. D. Power delivers. Thanks very much for joining us.

Craig Martin: My pleasure. Great to speak with you.

Doug Heikkinen: To learn more about J. D. Power and the study, please visit jdpower.com/business. Please follow us for timely updates on X, LinkedIn, and Facebook, all @Advisorpedia. For everyone at Advisorpedia, our producer, Julia Smollen, our engineer, Tory Miller, and the Power Your Advice podcast team, this is Doug Heikkinen.