February 20, 2014

Fraud Prevention, Robo-Advisors and Key Takeaways: 2014 T3 Advisor Tech Conference

In the first part of this two-part blog series, we reported on the atmosphere and some key product introductions at the annual T3—Technology Tools for Tomorrow—conference, Joel Bruckenstein and Dave Drucker’s increasingly important gathering. Below, we talk about some other buzz-worthy trends I saw at the conference, and list the major takeaways.

As virtually all the major advisor software tools are now online, the clear trend emerging from the T3 conference was that software providers and the investment custodians are now working hard to truly integrate and automate workflows more deeply, and make them more functional from mobile devices.

During the RIA custodian panel during T3—which in recognition of the conference’s clout included leaders from Schwab, Fidelity, TD Ameritrade and Pershing Advisor Solutions—the discussion focused on custodian efforts for everything from e-signatures and digital paperwork to mobile check deposit for advisors and their clients. Another focus was on straight-through processing, where an account might be fully opened and funded via a mobile device, with all the intermediate steps of paperwork and deposits/transfers handled digitally in a single-step process.

On the other hand, in an increasingly virtual world, the custodians also fully acknowledged the rising challenge of identity theft and wire fraud, and noted that they are sharing information about identity theft attempts in an effort to maintain better security for all advisors. As Schwab Advisor Services' technology guru Neesha Hathi pointed out, “anti-fraud efforts are not something we want to differentiate on” and instead emphasized the importance of collaborative efforts to maintain investor trust of the financial services industry in the aggregate.

Another notable trend at T3 was the growing range of “middleware” providers, which are software tools designed to sit between or on top of existing software, most commonly a CRM, to help ensure that the tools work well together. This year’s offerings included several middleware providers for Salesforce in particular (including the Athene Group’s “Skience,” Concenter Services' XLR8Orchestrate's Process Composer, and AppCrown) along with the debut of the Fox Planning Network’s “Genesis Smartware” workflow automation software.

Amusingly, while T3 is a (human) advisor technology conference, at one point during the opening general session a “robo-advisor” made an appearance, courtesy of MoneyGuidePro. Dressed in full robotic costume and with a robotic voice modulator, the “robo-advisor” expressed its intent to replace financial advisors, noting that "You can call me at 3:00 AM. I am Robo Advisor. I never sleep. I will manage your money."

Mocking the narrow focus of robo-advisors, though, the robotic voice struggled to answer any of the more complex and nuanced questions that were thrown at it by MGP CEO Bob Curtis, instead falling back to repeating its “I am Robo Advisor…” mantra, and then being overshadowed by a second robo-advisor meant to signify IBM’s Watson, which is being deployed as a business intelligence tool to help financial advisors serve consumers better.

Over all, there seemed to be little concern regarding “robo-advisors” at the conference, and while the T3 conference draws an admittedly technology-optimistic group, an audience poll in the opening session found that approximately 98% of the attendees viewed the ongoing evolution of advisor technology to be an opportunity more than a threat.

The Major T3 Takeaways

In the end, the clear takeaway from the T3 conference is that there’s growth underway in the tools coming available online to serve advisors. Ironically, the increasingly common technology challenge now appears to be less about finding software in the key functional areas (CRM, financial planning and portfolio reporting) and more about figuring out which software to choose, navigating what is both a dizzying array of features for many of the largest providers, and also a proliferating (but not universal) number of integrations.

Ultimately, the hope is that a series of consistent “data standards” will emerge that will make software integrations more consistent and universal. As was evident from the T3 conference, though, “integrations” are right now just a massive patchwork of “point-to-point” connections that each company builds with each other company one at a time. As the number of software providers grows, the number of integration combinations become exponentially (and eventually, unmanageably) large. For the time being, though, integrations are still happening one at a time, and though many of the “major” software tools have a wide list of integrations, and several middleware providers are further facilitating the process, advisors may have some trade-off decisions to make about how important it is for certain software to integrate with others.

In fact, in one session about growing an advisory firm that effectively leverages these technology tools, Abacus Wealth President J.D. Bruce suggested that the only real way to cut through the choices is to identify the one or two software tools that are “most” central to your practice and then build around them. For instance, Bruce indicated that for his practice, the two core tools are Salesforce for CRM and iRebal for portfolio management, and as a result any portfolio reporting software would have to work with those. As a result, he said, the decision became “easy” and Orion Advisor Services was the “clear” solution (as it integrates with both), but only because he’d already figured out which software would be a deal-killer if the new solution couldn’t work with them.

Over all, the broad theme of technology at the T3 conference was perhaps summarized best by Victor Fetter, chief information officer for LPL, who delivered one of the conference’s keynote sessions about advisor technology trends. Fetter noted that ultimately, the four big tech trends are the cloud, mobile, social and business intelligence (“big data”) solutions.

At this year’s conference, the focus was primarily on the cloud with a touch of mobile and social (though notably, Advisor Websites was the only website provider present and there were no social media compliance tools represented), but it’s clear that these themes will be guiding advisor technology in the coming year(s) as well. It’s important to note, however, that no provider seems to have fully demonstrated where value will be created from “big data” business intelligence…yet.

The bottom line, though, is that the T3 advisor tech conference continues to grow, both as a location for advisors to find technology solutions, for technology providers to connect (and integrate) and where the industry media gather to cover many of the biggest advisor technology announcements and company debuts.

For this year, the T3 conference had already been on my list of the “Top Conferences for Financial Advisors,” and it will definitely be back on the list for 2015. If you’re interested, be certain to save the date now: February 12-14, 2015, at the Hilton Anatole in Dallas.

Read the first blog in this series.

 

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