Bigger and better was the theme for the Envestnet Advisor Summit in Dallas, which had its largest attendance ever, according to Jud Bergman, CEO of Envestnet, at the show’s first location outside Chicago.
Advisors themselves can be bigger and better by utilizing technology to complement their firms. Bergman addressed attendees during the opening keynote on Wednesday, referring to the Kasparov Principle, which says that humans and machines working together are more effective than either working alone. Advanced technology needs human experience and creativity to create outcomes that work for individuals.
He was referring to the chess champion Garry Kasparov, who combined chess skills with computer programs to beat both supercomputers and chess grandmasters at the game.
“If you didn’t have to worry about the small stuff,” he asked, “what might you use your energy for instead?”
Document vaults, account aggregation and personal financial management apps give advisors a “quantum depth” understanding of their clients and “lay the groundwork for better outcomes for many years in the future.”
Tamarac clients on the Advisor Xi suite have 65% end-client adoption of the portal, Bergman said.
“This is one of the most amazing emergences of new technology that I’ve seen in my 17 years at Envestnet,” he said, noting that just four years ago, that number would have been less than 10%.
The fate of the Department of Labor’s fiduciary rule is not certain, though some in the industry may have hopes that its delay will lead to its death. “I’m not sure that’s the case,” Bergman said.
One of advisors’ biggest stumbling blocks is that they haven’t fully embraced integrated technology, Bergman said. Those who have are experiencing a “productivity lift” that lets them grow faster than competitors.
“It’s difficult to benefit from technology when applications don’t talk to each other,” he said.
The most basic level of integration is single sign-on is one form of integration, but data aggregation is more powerful, Bergman stressed. However, only half of advisors even have single sign-on capabilities, he said.
RIAs with advanced integration can spend 11% more time on investment management, according to an Aite survey conducted for Envestnet in 2016. They can complete 50% more financial plans, equaling 57% more clients served, 78% larger books of business, and 46% greater revenues.
Better intelligence leads to better outcomes, Bergman said. Machine learning and analytics can help firms forecast their clients’ behaviors. Data isn’t enough without insight, according to Bergman.
Among the challenges the industry faces is how to sustain itself, Bill Crager, president of Envestnet, said. The Envestnet Institute on Campus, led by Jim Seuffert, who joined the firm when Envestnet acquired Wheelhouse Analytics last year, to help meet that challenge.
Crager believes advisors will be more relevant in 2020 than they are today because the scope of what they do will widen.
— Check out Envestnet Announces Its First Essential Advisor Awards on ThinkAdvisor.