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The Roundtable Sonoma—Top Ten Takeaways

November 20, 2019


1. Enterprise Technology Platforms

The buildout of enterprise technology platforms is the trend. Significant work and resources have been spent, but the realization of operational efficiencies are still a work in progress. Among the many factors that are holding back the recognition of significant operational efficiencies are the use of legacy forms and manual processes by custodians and others.


2. Differentiated Client Experience

Firms’ longer-term strategic objectives include a differentiated client experience. Today, firms are committing meaningful resources towards understanding the new client interaction dynamic. Building out relationship journey maps that weave together technology and advisor value is imperative to being relevant to the investor. In fact, firms are using terms like “Financial Wellness” to describe this new journey.


3. Redefining Value

As an industry, the enterprise wealth marketplace is in the midst of a redefinition of the value that a representative/advisor brings to the investor. Incorporated into this redefinition is the perceived and the monetary. The race to zero commissions is accelerating this thinking. Other business models including the real estate, the medical and the transportation industries have been forced to change – now it’s financial services turn. Those firms that adapt with `be relevant. Those that do not, will not.


4. RegBI

RegBI will make the enterprise management profession a more professional one. Inherent to the process is the documentation of an investor’s view of risk, and supplying recommendations that align with that profile. The transactional nature of RegBI likely needs to evolve to be fiduciary. Why? Keeping the client’s financial needs fresh, and supporting the value-add of the advisor. Thus, financial planning and Investor Risk Management are super important. There is also a sense of urgency to fully understand this new rule and to be as prepared as possible for its implementation which is scheduled for this summer.


5. Educational Changes

The face of advisor education is dramatically changing. The traditional models of manuals and dreaded “training days” are out. Why? One on one training does not scale, is expensive, and is not 24/7 convenient. Taking root is training that is digitally available anywhere, gamified, and delivers persona-based dashboard status reporting that supports remediation.


6. Model Changes

1099 enterprise wealth firms are morphing to more of a life-cycle driven relationship model. This model is driving client segmentation with corresponding services. With advisors typically supporting too many investor customers, the new model aligns the investor’s place in their financial “needs” journey with the product-specific recommendations. Guardrails can be established where digital investing, or “robo,” can support younger basic need investor profiles, and as an investor’s financial journey gets more complex an advisor can add service layers.


7. Cybersecurity

Cybersecurity is a core challenge to enterprise wealth firms. With the explosion of fabulous FinTech, 1099 enterprise wealth firms are tasked with securing their own platforms as well as those of their reps/advisors. Traditional cyber point solutions are not living up to the task; platform solutions that minimize the number moving of parts (security vendors), close the gaps. The question remains – How big is the sandbox I need to control?

An added caveat is that wealth firms and solution providers alike need to get their arms around vendor management reporting and updating in a more digital fashion that is easier, streamlined and interactive internally and externally.


8. Data Ownership

The adoption of technology is hampered by Advisor skepticism regarding data ownership. Do I own my data? How easy is it to transport my customer data if I move? These obstacles need to be addressed to spur adoption regardless of how “good” the technology may be. And are the key policy/communication decisions to reaping a significant return on a firm’s ever-growing technology investment Data ownership is also complicated by various Federal, State and even international regulations governing data.


9. Table Stakes

Near future table stakes for all retail wealth management firms will include risk profiling, goal setting, goal tracking and some level of financial planning. The depth of services will be largely dependent upon the size of customer assets; and, service delivery will include a blend of digital and knee-to-knee. Increasing price transparency which requires a demonstrable value to support profitable pricing, Reg BI and younger generations of advisors and investors who are focused on data and the tools to exploit the information all contribute to this trend.


10. Reg BI Implementation

The resources required to implement Reg BI seem to expand as firms move forward with their planning. Firms can build on their DOL experience, but customer disclosure requirements will force critical decisions regarding product shelf/ compensation normalization and onboarding processes including increased pre-sales surveillance. The disclosure process itself, including documentation of appropriate disclosure, will become a forms management nightmare requiring a firmwide review of business practice and process.


11. Bonus Takeaway #1:

The cost of developing technology is becoming prohibitive unless significant value from efficiencies can be realized. Robust API’s are not easy to build or maintain, with many data integrations relying on a host of bodies in the backroom to make them “real”. The paradox of greater technology investment creating increased operating expense needs to be addressed through better collaboration between all players in the technology ecosystem.


11. Bonus Takeaway #2:

Recruiting is changing. The techniques to attract the best and brightest are fast changing. This is even more important in what is becoming a very low growth environment for many wealth management firms. How will your firm grow? What types of advisors make sense for your firm?