Technology Is Critical to BD ‘Information Business’

We have put together a committee of about 20 advisors, most of whom are somewhat younger, who are more interested in having this platform available to their clients. We are continuing to figure out exactly how they would use it and what they would want, so we can complete the final pieces of it and make it available for clients.

For example, what many advisors want is [that] the client can go in, look at everything. They could make trades, but before that trade went through the advisor who would look at it and say, “Yes,” and push a button in order to [complete the trade]. The client will know that the advisors going to take a look before it happens and the trades might be delayed. It’s not designed for someone else who wants to trade actively.

We’re trying to determine what’s really going to help advisors be successful and then complete the platform once we see what that is.

What we have found is there’s two models, I would say. One is the $25,000 account. Basically, [reps are] not going to be very much involved with that person but that person likes to trade anyway.

Then there [are the] million dollar accounts; they want to see what their account’s doing. They go in already through the clearing firm or through our technology and do that — it’s only a hop, skip and jump beyond that for them to actually be able to make trades.

We know that even today, and certainly 10 years from now, the client with $20 million isn’t going to do business with you if you don’t have a pretty sophisticated interface that looks a little bit more like a Betterment, combined with the stuff we already have that they can go into a brokerage account, see what’s going on. It’s really a question of building what the advisors want and that’s what we’re doing. Brian Murphy, Lion Street Financial, Division I: We haven’t rolled [a digital advice platform] out yet, but yes, we will. Like [Cambridge], we’re an advisoronly platform. We’re not going to use it as a competitive feature, but we are going to use it as an efficiency and increase-your-commercial-value tool for people.

I’m not concerned about digital at all for the company to be relevant and necessary. I think our industry is wildly behind other segments. You think about back in 1969, we put a man on the moon in, what, six days from start to finish? You can’t get a life insurance policy underwritten inside of 60 days.

We’ve got a lot of catchup to play, but at least for Lion Street, we want to make sure we know what our value prop is. Our value prop is how to make that advisor a better advisor for consumers. Consumers’ needs are changing and evolving with the time.

That’s why I’m not bullish on verticals, because I don’t think that clients view their needs vertically. Everything is connected with them; you can’t be everything, but you’ve got to be more than just a broker dealer or more than just an RIA platform.

Schwartz: In the old days, if you could pay people commissions regularly and not lose their applications when they sent them in, you were a successful broker-dealer. A lot more is expected from us these days: Technology, robo, insurance, RIA, practice management.

We spend $17 million a year on technology, which is way more than I would like to, but we’re not trying to do what [American Portfolios] is doing, where we’re building all of it from scratch. We’re incorporating stuff that the clearing firm has, other things, and also then building a lot to assemble it together.

That’s partly because we also want advisors to be able to choose. If they don’t like a CRM that’s embedded in our system, they could pick five or 10 others to use, and we can connect them. Then if Redtail is the popular CRM today and 10 years from now it’s not, we can unplug it and plug something else in.

Dolber: Integration is quite a skill. I would say 50% of what I do is integration.

— Click here for more coverage of the 2016 Broker-Dealers of the Year. 

Save