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Technology > Marketing Technology

2014 Tech Goal: Go Where Your Clients Are

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Technology helped spawn the independent advisor movement, and technology — especially in the form of mobile, integrated apps — will help it to continue to thrive in 2014 and beyond.

That was the big-picture takeaway from an editorial roundtable discussion between two providers of technology tools to advisors and one big user of those tools who gathered during the Schwab Impact 2013 conference in November. In the hourlong discussion, Neal Ringquist, president of Advisor Software; Stuart DePina, Group President for Envestnet | Tamarac; and Doug Besso, chief information officer at HighTower, spoke about the impact of “robo-advisors,” the expectations of end clients, advisor workflow and why independent advisors have an advantage over wirehouse brokers.

When asked if independent advisors and RIAs in particular have better technology than the wirehouses, DePina used the analogy of how communications infrastructure can be better in some third-world countries than in some developed nations because “they don’t have legacy technology.”

The technology tools available now for independent advisors can actually be more cost-effective than those used by wirehouse brokers. Besso noted that at wirehouses, “they have one choice,” while at a firm like HighTower, “we have to be flexible; we can’t be tied into the old infrastructure.”

Ringquist pointed out that at the wirehouses, the focus is more “document management,” while for RIAs in particular, technology is “more functionally oriented — it’s CRM-centric.” At HighTower, following its model of its advisor partners collaborating on all manner of issues, “we built our CRM using best ideas from each partner,” with the result that those partners “now love it.”

There’s much more to technology than just buying a piece of software, however. Besso said that advisors “have to think through” their current workflow and their business focus “before you build.”

Ask yourself, he said, ‘Where do you live? For many advisors it’s the CRM,” so any CRM solution has to interact with the other applications the firm uses. DePina said that advisors often misunderstand technology, “thinking it will be plug-and-play; but you have to invest” time and resources to make any piece of technology work in a firm.

The leaders of the firm in particular must commit to the post-sale integration of any piece of technology. “If there’s no buy-in, they’ll be lost,” he said, while Ringquist argued that it’s imperative to take into account the training costs of a firm’s employees. For every dollar spent on a piece of technology, he said, figure you’ll spend three times that amount in dollars and time on training.

What about meeting clients’ needs? DePina said that “if advisors don’t keep pace with what clients need, they’ll be in trouble,” with one of these needs being end investors’ desire for “on-demand, all-the-time mobility.” Ringquist agreed, saying that for advisors, an “app-driven workflow” that is “built for mobile” has to be part of what advisors use and what they extend to their clients.

Such client demand isn’t limited to younger clients, DePina says, since boomers “will have a lot of time on their hands,” and their demand for information will require advisors to build scalable technology to meet that demand.

There’s another benefit that can redound to advisors from building scalable technology offerings to their clients: their firms will become more valuable when it’s time to sell or merge. DePina says that some prescient advisory firms are already leveraging “big data” to benchmark their businesses against similar firms, and the flexibility that is a hallmark of independent firms will allow them to “change their practices,” and to build value, which comes from scale.

There’s another practical reason why scale is now so important. DePina recalled that “10 years ago, RIA technology budgets were nonexistent,” but then “2008 happened,” and advisors were forced to become more efficient or to perish as their revenues tumbled. “Now it’s a priority to get scale, and technology will provide more efficiency,” he said.

As for those researchers and pundits who forecast a sharp decline in the number of independent advisors, DePina isn’t “buying that.” Instead, he thinks there will be “a big jump in RIAs; technology will make them much more efficient.”

However, those advisors who want to presciently attract and serve younger clients must make sure they’re social media adept. “Millennials trust the community,” DePina said, and Besso suggested that advisors “have to be part of the community,” since, as Ringquist argues, “it’s where they communicate.”

Does the rising tide of so-called robo-advisors pose a threat to independent advisors? “I don’t see them as a major disintermediator for advisors,” Ringquist said, but they should serve as a “wake-up call for advisors,” highlighting the need to “communicate better with clients.”

Besso drew a connection between one of the keynote speakers at the Schwab event, author Daniel Pink, who pointed out that in today’s world, unlike the past, “the seller and the buyer both have the same information,” so their relationship is more equal.

“You’re not the only source” of financial planning and investment information, Besso counseled. “Don’t fight it.”

For more insights and practical tips on the technology issues raised in this article, we invite you to read


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