Luma Insights:

Why Financial Technology Empowers – Not Eliminates – Advisors

For some time now, investment management professionals have been concerned with technology’s impact on the number of financial investment advisors. This concern was initially triggered by the wave of robo-advisors that came on to the market some years ago. The seemingly overnight adoption of these robo-advisors had some wondering if real live human advisors would soon be displaced by an algorithm. While understandable, this concern is proving to be unfounded. While AI is here to stay, financial technology is just as often being used to help financial advisors work more efficiently. This leads to greater productivity which in turn leads to the delivery of higher value service. And this makes financial advisors MORE indispensable, not less so.

This point was illustrated quite eloquently just recently by Michael Kitces from Nerd’s Eye View, in a contributing piece to Financial Planning. “There’s an immense amount of room for technology to make us more efficient, bring down the cost of advice and serve the other 85%-plus of households that we don’t serve today.” reports Kitces.

In his article, he discusses how technology often “plays out in unexpected ways” and recounts the time in the 1970s and ‘80s, when ATMs first came online – which, in theory, would have replaced human bank tellers. Yet, despite the concerns of technology replacing human jobs, the result was the opposite. ATMs lowered the cost of banking and increased efficiency for banks. In fact, due to the increased efficiency, banks were able to open more branches and serve communities that they couldn’t serve in the past. This resulted in additional job opportunities for bank tellers.

Kitces continues by sharing his view that this is the path that he sees for the investment management industry. “Given most advisors can only serve about 100 clients in deep advice relationships – and in the late stage of their careers often winnow that number down to their 50 best clients – even 300,000 advisors at 100 clients each will only serve 30 million households. There are almost 120 million households in the U.S. meaning there are barely enough of us to serve one-fourth of all U.S. households.”

He concludes by saying technology makes both planning and planners more efficient and in more demand. This resonated with those of us here at Structured Views because the Luma platform was specifically designed for that purpose: to enhance processes, streamline workflows, and help advisors better manage and sell structured products that meet their clients’ portfolio needs.

Here are three examples of how Luma does this:

Education and Marketing Resources

Luma provides education and marketing materials so advisors are better trained and equipped to explain structured products to clients. These investments are complex. An advisor who can clearly explain structured products and how they are best utilized within a portfolio is a valued provider, not an expendable cost to be bypassed.

Post-Sales Support

Luma makes it easier for advisors to obtain post-sales performance reports and to stay on top of actions such as maturities, call dates and coupon payments. This is important because structured products are typically harder to track after they’ve been sold. An advisor who can help her clients in this regard is providing significant value.

Product Creation and Comparison

Luma’s creation and comparison features help advisors select the right investment opportunity for their clients. Additionally, if there is a specific type of product that an advisor wants to offer, a custom price quote can be created and submitted to our list of leading issuers.

These features and more are designed to assist in managing and selling structured products, thus ultimately helping advisors focus on their clients’ needs and not the manual activities athat would take up valuable time in the absence of technology.

For the full publication, see Michael Kitces on Financial Planning.

Luma increases efficiency for advisors through its award-winning platform that simplifies structured products and annuities. Advisors who use Luma optimize and improve their book of business through our innovative product creation and comparison tools, educational training and materials, post-sales support automation, and more.

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This information is for distribution to institutional clients and is for broker-dealer use only. It is not intended to be distributed to individual retail clients. Any material provided is for information only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument.