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Broker-dealer CIOs: The opportunities and obstacles of technology

Taking a vision to execution – top technologists share their take on what they're thinking now, and what they want to do next.

Jan 29, 2014 @ 12:01 am (Updated 6:52 am) EST

Wealth management as it exists today has been empowered and enabled by technology. InvestmentNews and Broadridge Financial Solutions gathered the people who make this possible – technologists at various advisory enterprises that have developed innovative platforms. When we talk about the future, these are the people who will make it go.

What excites them? Mobility. Transparency. Real-time access to consolidated information on a client's financial life—and perhaps more, including healthcare data and even their mail, giving the client one complete window into his or her personal information. The ability to initiate transactions via that window. These are the kinds of integrated tools the participants want for themselves.

But there are obstacles. The two biggest: bandwidth, which lags far behind our growing usage of mobile technology; and the diversity of operating systems and data needs of our various mobile computers. Today, for example, smartphones use more than 2,000 versions of Android software. Much of our future technology development will hinge on whether the market converges around a few standardized systems.

On these pages, the industry's tech leaders answer some serious questions on what's next for advisor technology.

Q: What are your biggest challenges now?

ROBERT DEARMAN, Senior Vice President, Advisory Practice and Platforms Strategy, National Planning Holdings/Jackson National Life: What really exciting is that we've got ubiquitous access. Today, 58% of U.S. consumers have mobile devices. Cisco reports that between now and 2017, bandwidth usage is going to increase 13-fold, even though the actual available bandwidth will increase only 7-fold. And two-thirds of that usage, by 2017, will be mobile web video. So advisors and their clients can now get unfettered access to what we have to offer. But we also have the challenge of a very diverse computing environment. And we have to take special care because now the broker‑dealer is being held accountable for every security breach. The stakes are very high.

DAVID BALLARD, Executive Vice President, Chief Operating Officer, AIG Advisor Group: Everybody wants to be able to see all their data in one place, whether it's fee-based accounts, direct business, brokerage, your checking account, your bank statement or your bill that's due. Consumers can do a lot of that through various online tools. Then they go to their financial advisor, and he or she may not be able to see all that.

RYAN REINEKE, Senior VP, Operations & Technology, Cambridge Investment Research: A core issue is that we don't have a standardized data model so that we can have all that information aggregated in one spot, consistently.

VIN CAMPAGNOLI, Chief Information Officer, Raymond James: Years ago, clients' expectations from technology were way down here. Now, it's not just our advisors pushing the technology envelope, our clients are pushing the technology envelope too.

And if firms can't satisfy those technology needs, the advisors are doing it themselves – which drives that real need for integration we're all struggling with.

DOREEN GRIFFITH, Executive Vice President, Chief Information Officer, Securities America: For the next ten years, the Boomers are still retiring. That's $2 trillion migrating from the Boomers to somebody. So how do we facilitate our advisors' communication with the Gen X and Ys? They will have more wealth than their Boomer parents did, quite honestly.

On top of that, how do we bring advisors in? Maybe they are our kids, but then they have to learn how to work with Boomers, because our kids are growing up attached to the iPad and the iPhone and Boomers would rather have a face-to-face conversation.

Q: How are you giving investors more transparency?

LEDA CSANKA, Senior Vice President, Chief Information Officer, Cetera: Both the Boomers and the Gen Xers are looking for sophisticated research tools. They want to be partners with their financial planner and engaged in the decision-making process; and therefore, they want client tools that see what the advisor sees. So although our advisors haven't said, oh, I want to put out client tools, the clients have really pushed advisors to make a client portal available.

TYLER DERR, Chief Technology Officer, Broadridge:How are you envisioning managing, from a business perspective, having an investor see what the advisor has done?

CSANKA: We don't see any conflict at all. I have access to all kinds of research on the Internet, but I still want to go to the doctor. Even though clients have access to so many things, they still want that advisor to help them make a plan.

We have a new platform coming out that we built in partnership with Envestnet. It provides custom performance reporting: The advisor selects the reports they want to make available to their client, and they can customize—it's a little more of a drilling-down and on-demand performance report. We're pretty excited about it.

REINEKE: We're building a service chain to connect seamlessly so we're not repeating steps. You just add value as you're moving up or down the ladder, depending on where it starts – with the client, the back office, the middle office. You have to sew it together.

BRITTANY NOETHEN, Chief Technology Officer, Berthel Fisher: I'm thinking about how technology touches every point of the sales process. We're a much smaller broker‑dealer than a lot of people at the table: We have two B‑Ds with 350 reps. How do you choose the right partners and then keep all those advisors happy? If you pick one software provider, and you do that integration without a standard model—actually quite a lot of work—then you will have your next batch of folks who say, well, we really love this other CRM, we really love this sales tool. So how do you do that?

BALLARD: Let's go back to the value of the advisor. My generation definitely wants to go in and talk to an advisor, but I also want to see my stuff. I want to see my assets and compare them, whether or not it's a waste of time. I want one view that my advisor can share with me and that shows all my assets everywhere, even my checking account or a credit card. I want them to know as much as possible so they can make sure that I'm on track and I'm on plan.

STEVE KRAMEISEN, Chief Technology Officer, First Allied Securities: More than ever, since the global financial crisis, advisors are realizing that they're not portfolio managers. They're in a relationship management business.

The financial planning tools available now really, really give insight, and with that, the ability to have a very special relationship between the advisor and the client. Tools can be tailored. Building the right relationship and picking the right tools can be the differentiating factor as we go forward.

BALLARD: We're exposing our web-based platform to the client, giving them an iPad app and all this other good stuff. But what we keep hearing back is, that's wonderful for all the assets that are in your fee-based account. It's all your other assets that aren't in that picture.

MARION ASNES, Moderator: In this picture, if the advisor is the CFO of your life, the app would be the spread sheet of your life, not just of your portfolio.

REINEKE: It might even be the video or the teleconference or the Skype. It's going to be more than just data: it's got to be interactive, a living plan. Say I just inherited a hundred grand. It has to sew back in to the process so the advisor sees that you have had a life event. You might open up your little app and make a change, but it's going to dictate a call. It's a two-way transparency.

GRIFFITH: That's assuming that they'll actually look at an app. The mode of communication for Millennials is texting, and we all know what our friendly guideline people think of texting. In the future our advisors should be allowed to communicate using whatever mode the client wishes. That's a challenge for us as technology facilitators.

Q: Are we solving the right problems?

DEARMAN: I'm afraid that we're going to automate the aggregation of data without questioning its value to the customer. To me, talking about outcomes is way more important than just talking about product types and asset allocation. We have to make reporting relevant to the outcome, especially in terms of estate planning and tax, inflation and interest rates.

For example, watch the new Chevy Cruz commercial. They have crash-imminent braking. They don't talk about the algorithm for collision protection. They say, I'm going to stop the car when I think there's a crash coming.

CAMPAGNOLI: With information is so readily available to clients, how do you keep your advisors one step ahead? How do you use that platform on the road, at home or on a boat, with an iPad? How does it become more active?

REINEKE: There's going to be a time in the near future when the development platform gets so simple that we're going to have to be the providers of data, not just integrating bigger tools. So you publish your libraries and — you know, back to security and data aggregation, I think the time is coming very quickly when the tech-savvy branches have a need and they'll say, let me build it myself.

CAMPAGNOLI: Let me share an experience. Years ago, my father-in-law passed away, and my financial advisor knew enough about me as a client that right after the funeral, he contacted me and said, “Are you traveling? I know you travel a lot.” And I said, “Not this week.” He goes, “Is your wife going with you?” And I said, “Where are you going with this?”

He said, “You gave me the information on your will and who's taking care of your children. God forbid, that's your father-in-law.”

It was eye-opening. He captured my information in his CRM system and used it.

DERR: It's about actionable analytics. And this can really change the business. So they know when you buy a car. When you have a child. You start thinking about capturing data and pushing it out to advisors. Combine this with an advice strategy and you've redefined the relationship.

BALLARD: The next step is being able to have a two-way interaction, and eliminating a lot of the paper. But also, turning the information around. Now you can understand, hey, people in this range should have an insurance policy. Your client doesn't have an insurance policy. Let's provide that information to the advisor.

So first step, get it all in one place. Second step, have that two-way interaction; and third, make sure that you're not dropping the ball on the analytics.

DEARMAN: The whole goal is to get to the outcomes you're talking about. It's proactively notifying the client that, remember, we agreed that it's time to make a decision on X, Y, Z.

Here's another experience. My father-in-law died in February. I had to answer 14 questions about the estate. I had no idea how to answer them. And my mother-in-law, my wife are looking at me, going, wait a minute, you're in the financial services industry.

The people who helped me, I'll be their advocate forever. But a predictive analytics engine could have notified me, or my advisor, ahead of time that these would be the questions we'd have to answer.

Q: If you build it, will they come?

CSANKA: I want to change the dialogue here. Technology is changing so fast. We have a continuously aging advisor population that is not learning to use the new tools as quickly as the tools are changing. So what we really need to focus on is not necessarily the latest, greatest, cool thing, but the tools and processes advisors need.

Our largest advisors have clients in many different states, so we put together a model office for a virtual advisor. Learning how to use tech tools is a big challenge and bringing in younger partners is an appropriate response.

REINEKE: You could spend a lot of money supporting technology that nobody is using unless you're trying to shift the independent space into focusing on next gen. We have to be ready.

Q: What would make your platform great?

KRAMEISEN: The first thing would be not to have an advisor work station, client portal, or broker‑dealer portal, but instead a single, truly common portal, one that would encompass the capabilities that you would need to run your business, to have the advisor run a great portion of their business, to have the capabilities that the clients would want to have and use entitlements to really turn on or off the capabilities that this common portal would have – including collaboration, reporting, operational efficiencies and capabilities, portfolio management. Because we all really need the same things. We just need different views of those things.

And then you're also in a position where you can dial up or down the client experience in terms of visibility, and that could be another preference that's built into the system.

REINEKE: If I can be a little flip, I would say I would like the Facebook financial services plug-in app.

GRIFFITH: Amen. Absolutely.

BALLARD: I would want one place that reports on everything I have, and knows where my money is, and then allows me to see, hey, I need to set up life insurance. I select everything.

I fill out the appropriate information. I have an advisor who collaborates with me, maybe in person, maybe online; and then, when I'm ready to go, I press a button and I've confirmed my decision as a client. Forget compliance for a minute. The app moves money out of my checking account or whatever account I deem, because it knows where all of my money is.

Today, we're pushing and pulling forms, data and E-signatures, and you need 12 signatures over here and there. Wouldn't you want just to buy the life insurance? You would go through the questioning process in order to make sure it's relevant and right for you, and then you could hit submit and you're done. Like when you go to the grocery store. You have one signature. You bought everything you need. You're done.

So at a global level, that's one-stop shopping. It's a pane of glass that looks at me and my financial world, and it allows me to react to it and execute on it without worrying whether there's a form I've got to mail.

CSANKA: And one more thing it does is, once I'm focused on retirement income, it tells me how to start withdrawing from all my accounts in the most tax-efficient way.

DEARMAN: Plus, lifestyle management because it's got both the asset and the liability side. To me, it's more than the windowpane. It's being able to act on it, update it, with a single click. Clients will tell you they want an investment objective, but that changes. Sometimes they don't behave the way they disclosed on that first new account form. So it needs to be dynamic.

GRIFFITH: I certainly would like a portal where I can also look at my latest lab results or my X-ray or my U.S. Mail.

NOETHEN: I'm really curious what people think is holding us back from getting to these dream portals.

REINEKE: Regulations. What's more, it's not even going to be consumed by 20% of your advisors. If you roll something out, you get 20% adoption.

One of the biggest opportunities we're going to have to differentiate will be if we can give them a very simple, configurable tool set that they can build up themselves.

Let's start with the end in mind. I want a PDF-looking form for my 50-year-old client, but I also want a dynamic box for my 401(k) because the client wants an alert when the value changes. It all has to be very configurable, unique, and easy.

Down the line, as the sophistication of our banks, OSJs and reps increases, they will do their own customization. I mean, in the last month, I have had four OSJs come to me saying they're building an app.

One of our problems is that we have 2.4 times the number of jobs than we do computer science graduates. So getting the skills to build out these libraries is a challenge, too.

DERR: That is a challenge for us as technology leaders. But we've found that we can attract and retain good talent by finding ways to allow them to innovate in structured ways. There is so much innovation on the horizon, we have opportunities in financial services.

Q: What opportunity do you most worry about missing?

GRIFFITH: I worry that I will miss that opportunity to provide the next collaborative tool.

KRAMEISEN: We don't want to miss the notion that because we have a lot of data to mine, that the data is of quality.

REINEKE: If we somehow miss the ability to leverage new technology to serve the client. I don't know what that new technology is and it probably doesn't even exist yet. But nobody thought the iPad was going to make it and every one of us has one now.

It's those little simple things. Stay with innovation. Stay with connectedness, and listen to what your clients think.

CAMPAGNOLI: The thing we can't miss is getting rid of legacy manual processes. The more our service assistants and advisors stay involved with what I call non-differentiating services, the more time it takes away from their being more productive. Half of them don't have time to adopt change because they're so caught up with manual processes.

NOETHEN: One of the things we're working on is straight-through processing, full digital processing. And I wish we could have three, five years.

BALLARD: Two things from my side. One is data analytics. It's not going to be how we do it. It's going to be what's visible and what you do with it after that.

The other one being able to make sure that we're at least staying ahead of the curve and being able to be device-agnostic. I don't want to care if you use our technology on a pane of glass that's on your mirror in your house, or when you're driving around and the screen is on your car.

DEARMAN: If you think about the experience that our target customers are going to demand, well, we know, for example, the iPad is being adopted three times as fast as the iPhone was. We know about the demand for real-time, for multimedia. We didn't even talk about mobile wallets, which in five years are predicted to account for 50% of some types of commerce. They will all condition consumers. The regulations will have to morph over time.

I worry about missing the opportunity to meet the people where they are, using the devices and the communication mechanisms they're choosing, so we can show them the value of advice.

Q: What insights can we get from our own data?

RAGHAV NANDAGOPAL, Senior Vice President, Strategy & Business Development, Broadridge: Aggregation is something that's fairly complicated, but, to me, analytics and insight have a greater value than just pure aggregation. Analytics will transform the advisors' decision-making process and redefine how they communicate with clients. We are at the tipping point and this will be a huge advancement for our industry.