That may be the overriding message of experts in advisor technology, including Spencer Segal and Eric Poirier, speaking at MarketCounsel’s annual conference in Las Vegas on Wednesday.
Jud Bergman, CEO of Envestnet—itself an early disruptor in the advisory space — captured this idea using bestselling author Malcolm Gladwell’s vivid metaphor of the young David slaying the giant Goliath as the essence of what disruption is about.
Entrepreneurs, be they Silicon Valley startups seeking to unseat established players or independent advisors seeking to attract assets from wirehouses, are all in the business of giant-slaying.
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What the slingshot-bearing David understood is that, to quote Gladwell from his book “David and Goliath:”
“Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.”
Goliath’s large size may have been the result of a pituitary disorder that affected his vision, enabling the nimble David to get a shot at the Israelite-taunting Philistine.
“The mighty warrior can be taken on by a simple shepherd who has courage and faith,” says Bergman.
A modern-day example of this disruptive dynamic is the brave Steve Jobs’ assault on the mighty Microsoft.
Bergman quotes Microsoft CEO Steve Ballmer putting it this way in 2007:
“There’s no chance that the iPhone is going to get any significant market share. No chance.”
At the time of that quote, Bergman hastens to point out, Microsoft was the most highly valued tech company; today’s most highly valued firm, in any sector, is the purveyor of that disruptive iPhone, Apple.
In today’s advisory world, he continues, “one of the Goliaths is the wirehouses; we established Envestnet to enable the independent to compete against the wirehouses.”
Having long been at the game of evening the playing field between institutional firms and small independents, what Bergman sees disruptive advisors doing today is “leveraging technology to unify disparate applications.”
Citing an Aite group study, the Envestnet CEO says advisors who use integrated solutions spend 40% less time doing back-office work, thus raising productivity and profitability.
Today’s frontier opportunity, he continues, lies in capturing the business of millennials.
“Traditional wealth management firms are failing to meet the digital needs of these clients,” he says, citing data that 40% to 60% of them want direct contact with clients but want it “monitor to monitor.” Fewer than 20% of traditional firms respond to this demand.
Bergman thus sees opportunity for tech-savvy younger advisors — he notes that there are more advisors today in their 60s than in their 30s, incredibly — for whom technology is not “disintermediating” (think robo-advisory firms) but “re-intermediating” the advisor.
How to re-intermediate the advisor was the implicit theme of another advisor technology veteran, Spenser Segal of ActiFi, which makes practice management software designed for advisory practices.
While a character in the late-’60s classic movie “The Graduate” conveyed his vital message to the film’s protagonist in a single memorable word, “Plastics,” Segal used geek-speak to convey what he thinks will be most disruptive in today’s advisory world:
“Cross-application workflow automation.”
“I know it’s a mouthful,” Segal acknowledged, “but you can’t be a bionic advisor if your tools don’t support you.”
And indeed, too often organizational barriers hold back firms from getting adequate support. The complaint Segal hears the most is that a firm will acquire CRM or financial planning software but fail to leverage it within the firm’s organization.
Segal illustrated the problem with a nifty cartoon showing five levels of utilization of a firm’s advisor technology.
Level 1 is where staff member Joe merely utilizes the knowledge that’s in his head.