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VOL. 10 | NO. 18 | Saturday, April 29, 2017

Investors See Benefits, Drawbacks In Access to Real-Time Technology

JODY CALLAHAN/Special to The Daily News

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Twenty years ago, if John Laughlin needed data on the stock market, he logged in to a Bloomberg terminal and started doing research.

With the click of an app, today’s investors can tap into an abundance of real-time information about how their investments are doing. Wealth management pros say that level of instant access brings both positives and negatives.

(shutterstock.com)

Today, that memory almost inspires a chuckle. No more trips to the library. No more clunky terminals. No more pencils scratching out data on pieces of paper.

“We would have to go and gather this data by hand, and get paper in the library, to do the research. And now that information is ubiquitous and free, for the most part,” said Laughlin, a principal at Summit Asset Management in Memphis.

John Phillips, chief investment officer at Red Door Wealth Management, also remembers those days.

“(We) had the software where we had the information at our fingertips. We paid for that software, and that kind of gave us an advantage over the everyday person,” Phillips said. “Today, that information is now available to almost anybody as long as you know where to look for it.”

As it has with virtually every industry it’s touched, the internet has revolutionized the way those involved in wealth management conduct their business. And that revolution, wealth managers say, brings both positives and negatives.

Before the rise of the internet, for example, most investors relied on a monthly mailing to keep track of how their investments were doing. Now, though, that information is available in real time, with the click of an app on a smartphone.

“The analogy is a doctor. Before, we would expect to go to the doctors, have a consultation and be done with it. But now we might get follow-up emails, a web portal to access our file to see how often we’re supposed to take our prescriptions,” Laughlin said. “That type of technology has translated into the financial world and people’s financial lives with that same sort of access and the expectation for access to their personal financial information and for advice from whomever is helping them with their financial lives.”

While that real-time data can be reassuring to a client, investors said, it can also cause unwarranted panic, especially in a less-savvy investor.

“It’s definitely one of the negative sides of technology. It probably hurts people more than it helps, giving them that access,” Phillips said. “They can freak out while sitting at lunch eating a sandwich and see that their stock is down 4 percent and hit a button and sell it. That is not investing. That is speculating and running off emotion.”

Added Laughlin: “You have to have a lot of discipline in your perspective if you’re going to look at it that often.”

The key to combat that, investors said, is educating the client to prevent such panic.

“If you counsel and educate your clients properly, they’re more concerned with where they are in regards to their financial plan than where they are in regard to the Dow Jones Industrial,” said Jay Healy, president and founder of Century Wealth Management. “The education part of that is critical. If your client knows what to expect on the front end, that there are (times) when the value of their accounts is lower, not higher, then it’s not that surprising when it does happen.”

The rise of technology has also introduced a threat that didn’t really exist two decades ago, investors said.

“The more you rely on technology, the more susceptible you are to hacking and cybersecurity issues,” Healy said. “In the old days, if all your client information was in a locked filing cabinet, it was pretty straightforward what you needed to do to protect it. Today, you’ve got all your information in the cloud, you may be hosting stuff in your office on the server but you may also be using stuff hosted in some data warehouse. You have to have some sense of the protections in place.”

But while technology has changed many aspects of wealth management, investors said they still see a generational divide in how they deal with their clients. The younger generation prefers emails, texts, electronic document exchange and the like.

Many of the older generation, though, still prefer the old-fashioned way of doing things: They meet in person. They call their adviser. They read the quarterly mailings that are still sent out.

“There’s a little bit of a generational divide that we see,” Laughlin said. “You maybe want to communicate a little differently to clients on the older end of the spectrum, and you have to adapt to clients who are on the younger end of the spectrum. We try to be aware of that and communicate in ways they are comfortable.”

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