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A successful digital transformation strategy requires several key elements. The most important steps financial firm decision makers can take are to have a clear and comprehensive strategy for overall digital transformation and to document and communicate the strategy across the entire firm. Consultants and vendors can provide experience and expertise to inform the process. Consider how legacy technology can be integrated but don’t be blinded by the cognitive bias of sunk cost fallacy; continuing to rely on outdated technology can be more expensive over the long term in terms of opportunity cost. Data security is also an important factor to keep in mind. Ideally, the right technology needs to be comprehensive, scalable, configurable, and secure. That’s doubly true for financial wellness technology.
For advisors, financial wellness provides the foundation that enables participants to manage their day-to-day finances so that they are able to contribute to their 401(k) plan—it’s impossible for people to save for retirement when they can’t meet their immediate financial needs. A key feature advisors should consider in evaluating a digital solution is the ability for clients to aggregate their accounts, both assets and liabilities, allowing the advisor and client to get a 360 degree view of the person’s financial situation together. Yet almost half of advisors don’t offer a client-facing online portal that shows clients their progress in meeting self-defined goals and managing monthly cash-flow.
How the solution provides education is also key. Research has shown that education alone fails to change financial behavior. Education needs to meet people where they are by personalizing the content and offering it at the right time when a client is more likely to be interested and motivated to take action, for example, in response to a major life event or change. A digital solution also offers the ability to track whether needed actions are being completed and send automatic reminders if they have not.
The ROI for advisors
A primary impetus for digital transformation is to provide a better, more personalized customer experience. For advisors, that frequently translates into providing better outcomes for clients and plan participants, resulting in a higher level of business success. Financial wellness technology provides the tools and data transparency that allow advisors to do well by doing good. As more employers look to add a comprehensive financial wellness solution to their benefits package, having a robust offering can make the critical difference in retaining current business and winning new plans.
Account aggregation
A key tool advisors should look for in any financial wellness platform is account aggregation to provide data transparency. Not only have consumers been educated to expect this convenience through existing personal finance apps like Mint, both participants and advisors benefit from being able to see all of the participant’s assets and liabilities in one place. Account aggregation allows advisors to more easily identify and personalize possible financial goals such as debt reduction or risk protection to improve the participant’s situation. Advisors may also identify opportunities for bringing in more assets under management, such as rollovers from prior employers or spousal inheritances.
For advisors who also have wealth management practices, account aggregation offers additional opportunities, according to David Benskin, CEO/founder of Wealth Access in Nashville, Tennessee. “Advisors can convert approximately 65% of assets aggregated,” he stated in a recent article. “Firms deploying aggregation are generating an additional $2,000 per client per year in new revenues.”
Not only can financial wellness technology that incorporates these features be an important piece of an advisor’s overall digital transformation strategy, one that helps to retain existing business while attracting and winning new plans, it plays an important role in succession planning and firm valuation. Firms with a well-documented and functional IT strategy typically command a higher value.
Our next post provides tips for ensuring your digital transformation strategy is successful—don’t miss it!

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