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Are You a David or a Goliath? How Advisors Can Hone Their Innovation Skills

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“It’s a golden age of innovation,” said Jud Bergman in kicking off the Envestnet Advisor Summit in Chicago, and he called on advisors to become “disruptive innovators” to better build their own businesses and serve their clients.

The Envestnet chairman delivered the welcoming address on May 14, drawing lessons on innovation from Malcolm Gladwell, Steve Jobs, the author Clayton Christensen (The Innovator’s Dilemma), Lou Reed, Nora Ephron and the Biblical tale of David and Goliath (from the first book of the prophet Samuel, for those of you keeping score).

Channeling Gladwell, Bergman said that David’s differentiator, his “delta,” was his speed and agility, which he needed as the underdog because it offset Goliath’s strengths of, well, great strength supplemented by armor. David eschewed armor because it would cancel his strengths, while it would take advantage of Goliath’s weakness—his poor eyesight. David defeated Goliath in single combat—“never discount the underdog,” Bergman said was the moral of the story—but an additional moral applicable to business was that for large, successful companies (a la Goliath) “past success colors our perception” to the point that they begin to believe too much in their own success, and wind up being those disrupted by smaller, nimbler competitors.

The advisors in the room, Bergman said, are Davids with the ability to innovatively transform their businesses, saying that “we’re at a tipping point for wealth management,” and that with Envestnet, “we’ll experience it together.”

Innovators, he said, question the status quo, pay strict attention to detail, build networks and are “experimenters who test, develop and rework” their innovations, “which don’t end with a product’s launch.” Citing Christiansen, he said innovators exhibit “associative thinking, connecting the dots that others don’t see.” Two examples: Steve Jobs seeing the graphical user interface (GUI) in action at the Xerox PARC research center in Palo Alto which informed his design decisions for Apple, and Howard Schultz who was fascinated by an Italian espresso bar while on vacation and brought that fascination back with him to jumpstart Starbucks’ success.

What are advisors’ strengths? Their fiduciary standard for one, Bergman said, their fee-based compensation, their ability to do their own research and finally those who can leverage “unifying technology.” He then cited an AITE study which showed that advisors who use such technology grow their businesses twice as much as those advisors who don’t. Financial planning and “behavioral coaching,” Bergman said, which over time can add 3,000 basis points to an end client’s portfolio.

Echoing the Advisor Summit theme of finding and addressing “The Next Big Thing,” Bergman said that “the next big thing isn’t robo-advisors, but ways advisors can use technology that offer added value” to their clients.

Summing up, Bergman said “we can become more like David and Steve [Jobs], defeating the giant while not becoming a Golaith” ourselves.

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