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How Merrill, Schwab, Fidelity Are Using Tech to Build Values-Based Portfolios

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Advisors can leverage artificial intelligence, machine learning and other technologies to offer greater portfolio personalization to their clients as more investors look to have their portfolios reflect their environmental, social and corporate governance values, according to industry executives who spoke at the Finovate Fall Digital online conference Friday.

ESG is “becoming increasingly important,” Kabir Sethi, head of digital wealth management at Merrill Lynch, said during the session “Surviving and Thriving in the Era of Hyper-personalization: Next Generation Strategies for Acquiring New Customers and Building Brand Loyalty.”

Merrill Lynch is working hard to find the best ways to use technology to uncover the needs of its clients in that area through data mining, he said. The goal is to be able to have the right conversations with clients at the right time when it comes to ESG solutions, he said, adding: “It’s become a massive area of focus for us” and will only grow increasingly important in 2021.

As for technology adoption overall, it “got off to a slow start,” but Merrill Lynch is “seeing a lot of traction now” among advisors, particularly when it comes to data mining, he noted. “We’re seeing adoption. We’re seeing more and more advisors understand that there is real power in being able to have” conversations with their clients made possible by technology, he said.

Meanwhile, as is the case when a consumer is buying any product, “you want to know what the ingredients are — you want to know if it links to your values,” Sara Tresch, senior vice president of digital transformation and user experience at Charles Schwab, said of investment portfolios.

“Here’s where you can take a whole quilt of individual preferences and, using sophisticated technology — or quite frankly not that sophisticated technology — allow people to customize their portfolios and also make sure they understand the risk and return that those choices might have for them,” she said.

The goal is to allow a client to have an “individual financial plan that links right to their life goals,” she said, adding ESG investing is “just another way people want to engage.”

“The fact that value-based investing is a topic and seems to have lots of staying power, I think is just another great opportunity to engage with clients,” she said.

This is also another “tremendous opportunity” to tailor the experience for each client — in this case the investment experience, according to Tricia Haskins, vice president of digital strategy and platform consulting at Fidelity Institutional.

Fidelity has partnered with the firm Ethic, which she noted offers technology that “not only helps [advisors] better understand the values of those particular investors that the advisor is working with, but also uses a number of different data sources to dig deep to really understand how are these investments meeting or not meeting the goals and the values of that particular client.”

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