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To attract younger clients, advisors step up tech game

Just 29 percent of millennials have sought the advice of a financial professional, a figure that hasn't gone unnoticed by the industry. After all, millennials stand to inherit $30 trillion as part of the great transfer of wealth in the next three decades.

To stay relevant, financial advisors are recognizing that technology has to be a big piece of their pitch to this generation.

"The expectation is being set by all of us, since we all live in a digital world," said Kendra Thompson, North American lead for Accenture's wealth management service.

Of course, technology can be expensive, but tech spending isn't really an option anymore, said Joel Bruckenstein, a certified financial planner and founder of the Technology Tools for Today, or T3, conference for advisors.

"Technology is not an expense, it's an investment," he said. "If you're getting an almost immediate return on your investment, what's the difference?"

Millennials with money, managing money, financial advisor
Rainer Holz | Getty Images

A report from Fidelity Institutional finds that advisors who deploy technology well — a class that Fidelity calls e-advisors — have assets under management 40 percent higher than advisors who don't, and they have higher numbers of younger clients. (To download the report, click here.)

"There's really no excuse today for an advisory firm not to have [robust technology]," said Bruckenstein.

So what are the technology bells and whistles that advisors are bringing out?

A look through the portal

Robo-advisors, digital platforms that automate investing based on investors' time horizon and risk tolerance, have made investing user-friendly and visually appealing.

Advisors are also rolling out client portals with the same usability. Portals allow clients to look up some basic information about their accounts without picking up the phone or having to make an appointment with their advisor.

"In the past, the advisor would print out the portfolio recommendations [and] the client would take it home and think about it for a while," Thompson said. "Now advisors are giving clients access to much more robust analytics and reporting."

Digital access and human advice can co-exist, Thompson said. "It doesn't mean I don't value the advice. But I want to understand it on my own terms."

Mobile is a must-have

Younger investors are increasingly ditching desktops and laptops. Even those still clinging to computers spend more time on smartphones and tablets, and they expect to be able to interact with their financial advisor that way, too.

"If [the financial advisor's] website is not mobile-friendly, they might not even have a chance with that client," said Jon Patullo, managing director of TD Ameritrade Institutional in charge of technology products and solutions.

Data from Phoenix Marketing International regarding affluent investors show that more than half of people under age 35 are comfortable managing their finances with mobile tools and have downloaded apps. Banking and investing apps are the most popular among millennials.

"Regulations haven't caught up to the technology. But there's a whole area of opportunity for firms to be meeting millennials where they are." -Kendra Thompson, North American lead for Accenture's wealth management service

Tech behind the scenes

As more advisors buy into passive management, many recognize that there's little use in spending their time creating customized portfolios for every client.

For example, Sophia Bera, founder of fee-only planning practice Gen Y Planning, uses investment management technology from Betterment Institutional to manage her clients' investments.

"I can outsource and streamline all my investment management, and then I can spend my time researching the ins and outs of student loans," she said.

Bera believes her clients' overall financial health will be improved by making the right decisions on how to handle their student debt than whether she picks the right small-cap value fund.

Technology has also upended what client meetings look like. It's no longer necessary for clients and advisors to be in the same room. Instead, say tech-savvy investors, they are able to deliver the same personalized interaction through video conferencing, but in a location and at a time that's more convenient for their clients.

"It doesn't matter where I am or where my clients are," Bera said.

While she's based in Austin, Texas, she has clients in New York, California and Minnesota. She works late on Tuesdays and Thursdays so she can have meetings in the evening, often after clients have put their kids to bed.

"I've met a lot of people's babies and dogs that way," she said.

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Getting social

Social media platforms are still tough nuts for advisors to crack. On the one hand, clients and prospects spend so much time there, and many advisors want to be in front of them. On the other, regulators have been clear that advisors can't solicit client testimonials. Advisors are rightly afraid of getting too friendly with their clients on social media to the point that comments can be misconstrued as testimonials.

"This is a case where the regulations haven't caught up to the technology," said Thompson of Accenture. "But there's a whole area of opportunity for firms to be meeting millennials where they are."

Social media is full of nuggets about what clients are up to. Just think of all the baby photos new parents share with their networks. Savvy advisors can go beyond just the "like" button. They quickly prep a pitch about the advantages of 529 college savings accounts, for example.

Trolling social networks can be time-consuming work, so advisors use tools like Hearsay Social to automate the process of finding these broadcasts and then following up with messages.

More importantly, social media is often seen as a vetting tool. Advisors who don't have a strong social media presence may not be seen as credible by prospective clients, Thompson said.

— By Ilana Polyak, special to CNBC.com