Business Transformation | 08.16.23

Enabling Advisors' Development With a New Set of Tools

by: Rich Blake

Here's a trillion-dollar question: can banks remain attractive places to conduct advisory business?

The answer, according to BISA members interviewed by Cerulli Associates researchers, is a resounding yes.

Undergirding the positive outlook is a mix of factors, including an especially smooth referral flow augmented by automation.

"It's like we have a well-oiled machine," explained one regional bank advisor of a framework that involves tellers, relationship managers and advisors working as a team to move leads through the pipe.

Equally promising in terms of momentum for this kind of modus operandi are the innovations in engagement techniques that fall under the rubric of AI and automation. And while generative-AI chatbots have hogged the spotlight of late – and raised hackles among regulators and top executives – industry members are quietly reaping the benefits of a much more mundane (but wildly efficient) sets of tools, such as seamless programs that execute auto-prompts, such as a suitably timed text that says something like "Happy 40th birthday, ready for that planning session?"

More AI, More Touches

"The automation of the process of implementing strategic touchpoints has been a game-changer," said Kevin Mummau, co-head of financial institution channel at CUSO Financial, part of Atria, and also a BISA research committee member. 

"We're talking about basic but effective engagements at appropriate times, and the fact remains that clients expect to hear from their advisors," Mummau said.

Indeed, recent BISA-led surveys suggest that the average investor expects to hear from their financial advisor at least five times per month, in part owing to volatile markets, rising rates and a general awareness that even the best laid plans need updating from time to time.

The same goes for leaders of bank channel advisory businesses when it comes to staffing. Shifting dynamics and competing models are putting pressure on banks’ and credit unions’ ability to attract and retain advisors, according to BISA/Cerulli researchers who cautioned that, over the next half-decade, bank channel advisor headcount is expected turn negative in terms of year-over-year percentage change.

Automation, already hotwired into bank advisory operations, should help tip the scales, as positions become more attractive/less tedious; and, at a minimum, more automation can offset the headcount attrition.
Interest in AI technology of all types is at its apex in the banking sector, per Tech Target.

"The strategic application of AI's many technologies – including machine learning, natural language processing and computer vision – can drive meaningful results for banks, from enhancing employee and customer experiences to improving back-office operations," TechTarget said.

Interaction Multipliers

Citing Accenture, TechTarget also reports that banks can easily quadruple the volume of interactions or transactions with the same headcount by using AI-based tools.

The banking industry is largely digitalized, operationally speaking; but it is still riddled with human-based processes that can be paperwork-heavy. “In these processes, banks face significant operational cost and risk issues due to the potential for human error,” TechTarget said.

Robotic process automation (RPA) is software that mimics rules-based digital tasks performed by humans. It’s being applied in banking to eliminate much of the time-intensive and error-prone work involved in data entry.

A new AI-technology abetted tool to create family trees – so advisors can more systematically engage with patriarchs, matriarchs, siblings i.e. future clients – has bank channel advisors excited these days, according to Mummau.

"One of the biggest issues with AI has to do with worries about displaced human workers but the reality is that is far from the case," he emphasized.

Automation only empowers an advisor who is free to do more actual financial planning and less busywork. 

Now it's all preordained; set it and forget it: one click to text, email, call or visit an online portal. 

"AI does not replace humans," Mummau said. "It augments the whole process with human advisors staying in the lead."

Where technology can take the lead is in the simplification of tasks that used to be arduous and time consuming; basic tools ensure well-oiled machines hum along as smoothly as possible.
Because, as one regional bank advisor told Cerulli, the bank channel can be “a constant flow of clients that come to us.”

No other channel, not even the wirehouses, can boast this kind of built-in referral pipeline. “That’s why I stay with the bank,” the advisor stressed.

This past May, Cerulli and BISA jointly published, "Improving Recruitment and Retention Throughout Advisors’ Lifecycles: Uncovering Opportunities and Best Practices Within Banks."

Through interviews with advisors at BISA-member firms, Cerulli not only found that referrals are a crucial competitive advantage enabling bank advisor programs to foster professional development, growth and productivity – but a slew of other primary factors that give banks an upper hand when it comes to maintaining their status as an attractive venue to conduct advisory business. 

To find out more and obtain a copy of this report, click HERE.