Frank Coates, head of analytics for Envestnet Yodlee, has a lot on his mind these days when it comes to technology trends.
The former Army lieutenant and computer-science major first signed up for the financial services industry in 1990. The company he started in 2010, Wheelhouse Analytics, was bought by Envestnet six years later.
Today, though, he’s focused on one short-term trend and one that’s longer term.
At present, Envestnet is rolling out analytics capabilities that can be introduced at the advisor level, “down from the headquarters of the broker-dealers,” such as some benchmarking analytics, explained Coates during a break at the recent Financial Services OneVoice conference in New Orleans. “We want to change how financial planning is done.”
Part of that means changing the conversation with clients about retirement, which now resolves around the “retirement math,” i.e., asking them to, say, save $12 million, he points out. “This is an unattainable mark for many investors.”
Instead, how about asking, “Who will you be when you retire vs. who you are today?”
Envestnet has “years of wealth data,” Coates explains. “We are building … a database that can help advisors,” particularly when it comes to behavioral finance.
For instance, advisors can look at data on how large numbers of investors of a certain age or risk profile were doing five years ago and compare those figures with how the investors are doing today.
That can show advisors and investors, for instance, how “one group did this with their assets five years ago, and now this is their situation,” he added.
By supplying advisors with information on good, bad and mediocre decisions, these FAs can work more effectively with clients who want to know how they are doing relative to others, and what they need to do “realistically better,” according to Coates.
What is realistic? “Some people cannot run a five-minute mile, but maybe they can run a mile in 10 minutes. Why not help them get to 9.50?” he asked.