Wealth manager thrives on 'do it yourself' culture

Feb 2, 2014 @ 12:01 am

By Trevor Hunnicutt

There is no shortage of software products that developers market as the “solution” to financial advisers' every conceivable need.

But adviser Kenneth R. Smith said firms often have to accommodate themselves to those products' limitations.

“When you start out having a lot of things off the shelf, like financial planning software, you accept that the settings are not adjustable, for example, or they're not specific to the portfolios you design,” said Mr. Smith, chief executive of Empirical Wealth Management, an independent financial advisory firm.

But as his Seattle-based practice has grown, so too has its technology budget. Now, when products don't exist to meet the firm's exact needs, it builds them itself.

Empirical Wealth Management ranked in the top two among 317 firms for using the highest number of internally designed software programs, integrated platforms and cloud-based applications, according to the 2013 InvestmentNews Adviser Technology Study. For that, InvestmentNews recognized the firm with a Best Practices “innovator” award last year.

ROOM FOR IMPROVEMENT

But Empirical Wealth Management still sees room for improvement.

For instance, the firm is looking for better ways to communicate with clients and prospects about their retirement planning.

So Empirical Wealth Management has hired developers to build software that will allow it to represent asset projections in a user-friendly way, according to Simon J. Liu, the firm's chief marketing technology officer.

The goal is to create a fully integrated software program that creates a report showing investors how different market outcomes will affect their retirement income, and separating assets into different “buckets,” or risk tolerance pools, based on clients' needs.

The firm calls this the dynamic-income-distribution approach, Mr. Smith, 41, said.

“As we're growing, we're having the ability to be more differentiated in the tools that we design, the way we'd like to do it,” he said.

The software development process is experimental, but Empirical Wealth Management hopes building its own software will yield “more-robust” results.

“It's exciting stuff,” Mr. Liu, 28, said. “It's always great to see something built from the ground up.”

WORKED HIS WAY UP

Mr. Liu started at Empirical Wealth Management as a college intern and worked his way up the ranks at the six-office advisory firm, learning client services as well as trading, implementing changes along the way that made his job easier. Now he leads the tech efforts for a firm that is far less “manual” than when he started, sending out birthday cards to clients automatically, letting clients book appointments and upload documents online, and tracking their passwords centrally.

And Mr. Smith gives Mr. Liu a sandbox to try new things, as well as the assistance of an external information technology firm, on retainer, that handles continuing maintenance and serves as a sounding board for new ideas.

“When you give someone a budget, they get excited about bringing something useful to the table,” Mr. Smith said. “It gives him the ability to make experiments that help the whole company.”

Despite the firm's progressive approach to technology, it has focused less attention on mobile applications, according to the InvestmentNews study.

Empirical Wealth Management would rather focus its efforts in the office, Mr. Liu said.

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