A gathering of executives from up-and-coming, as well as established, technology companies sat with AdvisorOne at the TD Ameritrade conference in Orlando Friday morning for a discussion of the state of advisor technology, integration and where the innovation is likely headed next.
Participants were Chris Valleley, senior product manager at TD Ameritrade Institutional; Eric Clarke, president of Orion Advisor Services; Brian McLaughlin, CEO of Redtail Technology; Spenser Segal (left), CEO and founder of ActiFi; and Tony Leal, CTO of Money Guide Pro. The roundtable discussion was moderated by Jon Patullo, managing director of technology product management with TD Ameritrade Institutional.
Patullo began by asking the assembled executives about the current state of technology.
“We’re at a break-through point,” Clarke said. “We’re seeing incredible things that result in more efficiency. Advisors can communicate in real time with every aspect of their business, so it’s an exciting time for firms. What’s been developed over the past few years in now coming to fruition; it was only about three years ago that we were sending over batch files; no longer.”
Segal added that the trends revolved around the evolving definition of integration with “single sign-ons” and an integrated advisor workstation.
“This is why the approach TD Ameritrade has taken is so good,” Segal said. “It allows the advisor to build their own. On a single server, they can monitor cash flow, the custody of the assets, rebalancing, etc. I hear all the time from advisors that, ‘I’ll be in heaven when I have [a certain technological capability].’ The fact is, he can.”
Valleley said he’s excited to see the tools and applications now available, and that “we provide, but advisors implement.”
McLaughlin added it’s an opportunity to make any choice the advisor might wish for about technology, which he believes in a “game changer.”
Leal said it’s the ability to blend together a unique process with creative information to in turn deliver a unique experience for clients.
“RIAs don’t want us to pick their technology,” Valleley asserted. “They want us to help them with practice management and workflows.”
Leal asked participants where they think technology is headed next.
Clarke responded by saying the advisor will pick the type of user interface, depending on job function.
McLaughlin said a single-sign on will be a “speed bump,” but that a widget could help.
Clarke spoke up to say a widget would let advisors “respond to client inquiries in a much timelier manner.”
Segal reiterated that “the theme is about a customizable, integrated advisor workstation,” but he added that it would be customizable at the firm, and function, level.
When Patullo noted 32% of RIA firms were now on the cloud, Clarke responded by explaining that advisors started out in wirehouses and went independent because they liked working with clients and managing money, “but no one says ‘I really want to run my back office.’”
“The first thing they want to do is outsource,” Leal said. “Eventually, I don’t think software will be offered to the advisor to do it on their own anymore,” to which Clarke agreed.
“It’s your data, but if they leave it becomes their data,” Valleley added. “Being on the cloud benefits that.”
Leal said he used to often ask advisors when they last backed-up their data, to which he got varying responses, but rarely did they back-up their data on a consistent basis.
Clarke agreed, noting, “It was not that long ago that we were having that discussion.”
Patullo then asked about the biggest technology requests the roundtable participants receive from their clients, and specifically about the tools they’re looking for.
Valleley said advisors are aware of the technology trends; they see integration in their cable company and phone company and on the mobile device they employ, so it’s natural they would expect it from their business technology provider.
“They see it when they come to conferences like these,” he added. “They see the iPads and other tools to make them more efficient, and that translates to our world and what we do.”
Leal noted the problem of technology oversaturation, and that platform providers “are inundated with ideas. It starts with 100 ideas, then thousands and it becomes a system overload. Conversely, we’ve been hearing ‘make it simpler’ from advisors, who still want cool features, but then which do you keep?”
Segal answered that this is where “widgetizing” comes in.
“It will be a tectonic change in the advisors mindset [when it happens],” he said.
Clarke added that “technology will be simpler, but geared towards that individual user. The user experience will be more and more customized.”
“It has now gone from functionality at the practice level to functionality at the user level,” McLaughlin agreed. “The guy who’s doing trades all day long will have a far different experience from that of the advisor.”
Segal argued it’s critical to get the advisor to understand functionality and use it. It’s “not about making the horse go faster, it’s about getting them to use a car. They’ve bought and paid for the technology, but then don’t use it.”
Leal agreed, noting that it “kills me when [advisors] call me and say they don’t use certain functions. That’s when we know we’ve become too bloated.”
Patullo asked about the importance of technology in building the advisors business.
Segal said one of the biggest challenges is hearing “my buddy uses this certain technology, it’s cheap and has shiny buttons, so it must be right for my business.”
Segal recommended a five-step plan for evaluating and implementing technology: Assess needs; envision what it will do; plan to achieve expected result, implement, and then; monitor on an ongoing basis.
Clarke argued that advisors look at technology as “how does this add value to my client?”
“And how does it add value to my staff,” McLaughlin countered. “Advisors never bring their staff to these shows.”
“From a productivity standpoint, technology tools should not be purchased unless they add value to the client,” Clarke insisted. “I really believe that. If it doesn’t add that value, why would clients need the advisor?”
Valleley noted that too often, when the technology is purchased an implemented, advisors feel “that’s it. They have the tools, but then don’t have the aptitude or training. I present them with what we are working on and inquire about what they need.”
Clarke said he believes that the staff using the technology should be included in any purchase decision, as that involvement incrementally increases the overall adoption and use of the technology.
“Advisors have to consider the whole [technology] ecosystem,” Segal concluded. “Integration is an important factor, but it is not the only factor. Tech decisions cannot be made in a vacuum.”