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November 29, 2017 at 10:30 AM
Regulatory matters may have dominated industry headlines for much of the year, but cybersecurity and technology issues had their fair share of the limelight. This year, more robo-advisors came to life, along with a variety of mobile applications and social media tools.
The use of artificial intelligence made more inroads into financial services, with LPL Financial announcing its work on virtual assistants. Plus, a series of data breaches announced by organizations like the IRS and Securities and Exchange Commission — along with Equifax — raised concerns for investors, advisors and others.
(Related: What 6 Top BD Insiders Divulge About Fintech Trends)
For insights on recent fintech news and IT trends overall, Investment Advisor turned to a dozen industry leaders, six from fintech here and six broker-dealer leaders in another article. They all shared their views on the top innovations of 2017, as well as what lies ahead for the field in 2018.
Ron Carson Founder & CEO, Carson Group
Biggest news of the year:
When I think of “significant” news, I think of factors like influence and reach. With that in mind, this year’s noteworthy news definitely was the Equifax breach. A financial firm’s ability to build great technology is dependent upon its capability to integrate and share data. In a world in which the largest holder of data is compromised, the big firms that fintech solutions need data from the most have stopped — or stepped back from — integration and access plans that lead to better outcomes for clients. Without this ability, the reliance of innovation goes back to large holders of data, which historically hasn’t led to the level of innovation and large-scale change that clients demand.
Most impressive development of 2017:
Quovo has done some amazing things when it comes to splicing data for the end client. Its technology is making leaps to connecting advisors and clients in a whole new way through their suite of fintech application program interfaces (APIs). How an advisor leverages and presents data to their client is fast becoming a reflection of their brand, and Quovo is making some interesting advancements in how information and data can be used to gather meaningful insights and enhance the client-advisor relationship.
Thoughts on the Equifax breach:
With real risks of data breaches, firms are faced with two options: (1) paralysis in accepting the risk, which means being left behind the innovation curve, or (2) building out all safeguards possible to be well-positioned to move forward to thrive.
Top achievement of 2017:
By far, our most exciting achievement in 2017 was the launch of our end-to-end digital experience, and how it is not only reinventing the way clients can engage with our advisors but also providing an integrated dashboard demonstrating the lifetime value of the advisor.
The platform includes a risk-tolerance survey, digitized allocation tools, automated paperwork (enter the data once and never again), a proposal tool, real-time dashboards for both the advisor and the client, and most recently, an interactive annual review tool showing where the advisor adds value, as well progress towards the client’s financial goals.
Focus for 2018:
Every decision we make as a firm starts with the client in mind. Our focus in 2018 will take that mission a step further by enhancing the integration and capabilities of our end-to-end digital experience. We’ll also be launching an online offering/experience that gives our clients the ability to choose their engagement level, interaction level and service level. Our technology will allow for clients to move up and down the value chain as their needs change — and provide our advisors with the ultimate advantage: the flexibility to serve their clients where they are.
Favorite tool:
I’m never “on the clock” or “off the clock” as the CEO of Carson Group, so naturally, my iPad is my favorite tool, piece of software, and device all in one. It’s the only piece of technology I need (along with my phone) to do my job.
More thoughts:
The large institutions in our profession will continue to push for innovation and be forced to acquire small innovative firms that possess products changing the marketplace. Large firms will control integrations with their platforms and also control the progress made without small firms making big bets.
John Connor Vice President of Third Party Integration & Support, Schwab Advisor Services
Biggest news of the year:
Envestnet’s acquisition of FolioDynamix was a major news item this year. We also saw a significant deal with SS&C’s acquisition of Modestspark. These deals represent the trend toward comprehensive, one-stop solutions and outsourcing of portfolio management.
Most impressive development of 2017:
Solutions in the wealth management category was a key theme this year. Providers like eMoney, Addepar, and Riskalyze aren’t new, but they have cemented themselves as major players in the wealth management category and have become core tools of forward-thinking firms that are moving beyond the basics of investment management.
Thoughts on the Equifax breach:
Schwab has made and continues to make significant investments in security, and we’re extremely selective in choosing third-party providers. Advisors put tremendous trust in the security of our platform, and we never take that for granted.
Top achievement of 2017:
Schwab is in the midst of a digital revolution. We are carrying out a multiyear digitization strategy across everything we do, and we saw great progress on this front in 2017. There are many examples, but a couple that stands out include our digital check deposit capability, which is in pilot now, and the launch of aggregated account viewing on Schwab Alliance, our white label web and mobile platform that allows advisor clients to access their account information.
Focus for 2018:
In 2018, Schwab will continue transitioning manual and paper workflows to digital. We’ll make new digital capabilities available to advisors through our custody platform, Schwab Advisor Center, and through integrations with third-party technology providers. These investments are all about helping advisors streamline routine tasks so they can scale their businesses and serve clients better.
Favorite tool:
Salesforce is broadly used by the team at Schwab. We use it as a CRM and rely on the communication portals to interface with clients and third-party providers.
More thoughts:
Advisors are feeling optimistic about artificial intelligence and machine learning. It’s been a lot of talk so far, but we think that’s going to change, and it seems that advisors feel the same. This year, we surveyed 2,000 advisors on their expectations for AI, and 44% said they believe it will help drive business growth.
Joe Duran Founder & CEO, United Capital
Biggest news of the year:
The biggest development is the hybridization of the robos led by Vanguard Personal Advisory Services, successfully blending technology with human advisors to approach $100 billion in assets under management. We’ll continue to see Vanguard, Betterment and others add humans to serve investors as hybrid robo platforms move forward.
Most impressive development of 2017:
IBM found financial services were 65% more likely to be targeted in a cyberattack than other industries. CleverDome steps in as a cybersecurity co-op including names like Redtail, Orion and just recently NetFoundry. CleverDome brings military-grade security to the equation to help protect such critical financial transactions.
Thoughts on the Equifax breach:
Data has become as important as money, but we’re not seeing businesses treat data like money. There has been a heightened awareness of data breaches, but most firms still see treat their data as a liability, instead of a valuable asset that not only needs protecting, but investing.
Top achievement of 2017:
It has been gratifying to watch the rapid expansion of our FinLife Partners digital wealth operating system. Advisors managing a combined $8.18 billion in assets have signed up for FinLife Partners less than two years after its inception.
Focus for 2018:
We want to engage with our clients at their convenience, not ours. When we can untether ourselves from geography and put ourselves onto our clients’ mobile devices, we can add more value to these relationships with clients, who will appreciate the quality and convenience they’ve come to expect in a digital world.
Favorite tool:
We get a lot of use out of Domo. It’s an effective visual representation tool for analytics. It integrates financial and non-financial data streams into a single, visual platform. We’ve used it to make data-driven decisions, and to automate a number of tasks critical to our growth objectives. With it, we can more easily find opportunities and stop threats.
More thoughts:
Michael Kitces Partner & Director of Wealth Management, Pinnacle Advisory Group; Co-Founder of XY Planning Network; Publisher, Nerd’s Eye View
Jon Patullo Managing Director of Technology Solutions, TD Ameritrade Institutional
Clara Shih Founder & CEO, Hearsay Systems