Few years have put advisor technology into focus quite like 2020. Executives at this year’s WealthManagement.com Technology Forums made that point abundantly clear, with panelists from risk management to document management weighing in on what technology advisors should have, or have asked for, and in what direction tech should move from here forward.
The three virtual forum sessions, called the Advisor of the Future, were held in conjunction with the 2020 Wealthies and each had a different theme, including what technology decisions big firms have invested in or recently rolled out, what the future will hold for advisors, to the best moves advisors can make today. These session are the starting point for a series of virtual forums running through 2021.
A major acknowledgement across the recent three forums was that advisor technology preferences have shifted from a “full [tech] stack” to an integrated tech stack, according to Steve Lockshin, co-founder of estate planning software Vanilla and founder and principal of Los Angeles-based RIA AdvicePeriod.
“It keeps cycling,” he said, adding that advisors are currently in the integrated era because the API-driven development of the past few years allows advisors to draw up “their own bespoke tech stack.” (A glance at Michael Kitces’ now-famous Advisor FinTech Solutions Map provides an illustrative example.)
“The tech industry has done a lot of unbundling in the last few years,” added Yang Xu, CEO of advisor wealthtech software provider TradingFront. “The features that advisors need to perform their job on a daily basis—they see 20 categories.” Cloud computing’s cheaper programming economics, for example, has produced faster iteration and development of new ideas, leading to an explosion of advisor tools.
But even as customization has proliferated, there’s a cost to the a la carte approach. Due diligence and shopping for the right product can be “somewhat overwhelming,” said Abby Salameh, CMO at Hightower Advisors. That’s driven firms like hers to do the product picking and integrations, but only for certain central tech pillars an advisory firm will rely on like Salesforce.
Advisors considering changes or additions to their tech stack would be wise to act, said Adrian Johnstone, co-founder and chief commercial officer of CRM provider Practifi. “We've seen a lot of firms who have become a little paralyzed in making a decision,” he said. “There's been this idea of, we'll wait till we're back in the office or we'll wait until things go back to how they were.”
“Be careful what the cost of that waiting is,” he warned, “because it may not go back to where it was.”
Acceleration is another major consequence of the pandemic. Cetera Financial Group accelerated its “universal account opening” earlier this year, said Mike Ragunas, EVP and chief information officer, which involved an increased reliance on automation and digitization.
Advisors at Merrill Lynch Wealth Management launched its new Client Engagement Workstation during the pandemic, said Vivek Pappu, director of the firm’s digital channel.
“It was rapid adoption,” he said. “We will continue to prioritize digital engagement and improve the capabilities that make it easier for clients to engage with us digitally and add more features in the digital platforms. That’ll probably be the focus for the next 10 to 12 months.”
It’s not just technological invention that has been accelerated; the pandemic killed, in short order, the traditional in-person advisor-client interactions.
“The COVID pandemic has put another nail in the coffin of the analog experiences, of the branch-based experiences, of the in-person based experiences,” said Anton Honikman, CEO of MyVest. “Advisors, now, who are used to operating in that world are dealing with customers and investors who are now—immediately—in the digital world.”
Advisors have reacted to consumer demand and moved to digital, he said, but not as quickly as consumer demand changed.
Not only are advisors facing higher expectations from investors, but investors in a digital world are more “portable,” said Honikman. To remain relevant, advisors should focus on personalizing their service for investors, because the costs of switching advice providers is becoming cheaper than it used to be.
“That’s the next frontier for advisors to face,” he concluded.
All forum participants agreed on change being one of the year's defining characteristics, even as the pandemic continues to change the behavior of people, both in wealth management and across other industries, advisors will have to cope with changing realities. To that end, flexibility, whether it is in how advisors work or a necessary characteristic of their tech stack, has become defining aspect of 2020.