At the 2016 Broker-Dealer of the Year roundtable in August, we asked the winners to imagine they had launched a digital advice platform but growth had been stagnant. They responded that they had done just that and were having no such problem.
Lon Dolber, American Portfolios, Division III: The challenge in building a platform is being disciplined and establishing an approach to your development. That always, for us, was important: managing your initiatives and priorities.
To me, when you’re developing your own systems and your own technology, you must have a discipline. If you don’t, you’ll have a lot of weeds growing in your garden. That was the start. Now we’ve taken it to another level, for the last couple of years, with the hiring of a master Six Sigma black belt.
Jamie Green, Investment Advisor: Do you need to have a digital advice platform?
Ralph DeVito, The Investment Center, Division II: We used to partner with a third party. We looked at a whole bunch of them and picked the one that we thought was the most compliant and had enough infrastructure. It’s not just an algorithm. There’s actually people underneath the digital part of it, and we’re growing, gangbusters. It’s not stagnant at all.
Green: Now this is for your people working with your advisors, not as a separate channel bypassing your advisors?
DeVito: They can do it on their own, but they’re working in concert with the advisor. We’re taking that smaller account that’s going to be affected or dismissed by this DOL rule. They’re not serviced, and the reps are using it to augment that process, get prepared, and it’s growing leaps and bounds.
I don’t have the demographics of it — is it millennials or older people — but it is, in general, the smaller accounts.
We wanted one that asked the questions. It wasn’t just going to be one of the huge names that we see on TV. You can open up that account the way we used to open a brokerage account in 1970 — name, address, [Social Security number].
I said, “There’s no way I’m going to allow that kind of product.” We do a little bit more indepth look at the client for suitability. The reps are embracing it, and they’re using that also to transition to those accounts that might be just strictly advice accounts to the advisory model.
Dolber: A big key decision was to acquire an advisory platform company called TrustFort, so I could manage the development schedules. We now have 25 individuals in India that we work with, and we’ve always had the six or seven in Romania that have done our .NET work.
Managing people in other countries is a bit of a challenge, but we’ve done it. The main purpose, again, is that I wanted to control my own technology and the things that I build, when I build them, and why I build them. To me, it’s not about DOL, it’s about whatever’s coming down the pipe. I want to be able to move to the left, move to the right, and be in control of that situation.
Eric Schwartz, Cambridge Investment Research, Division IV: Clearly, technology is the backbone of the information business, which is what we’re in. We are not interested in having a robo-platform that competes with our advisors. We don’t want somebody that doesn’t have an advisor to come and see our platform and decide to invest their money with us. That’s not the business we’re in.
I’m not saying it won’t ever. We never know where the world’s taking us, but our business is to work through advisors to their clients. Before robo ever existed, we already had 80% of a platform that could become robo.