Tools financial technology companies plan to bring advisers in 2017

Many of the tools will be inspired by today's customer, who wants the same efficiency and ease they find with Amazon

Dec 16, 2016 @ 11:56 am

By Liz Skinner

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Advisers wondering what their technology providers will offer next year will be happy to know that they're focused on the same thing that most advisers emphasize — the client.

Many of the tools financial technology companies plan to deliver for advisers in 2017 will be inspired by today's customer, who wants the efficiency and ease they find with Amazon and Netflix to be delivered by their financial services providers, too.

“We live in a world where we are all using technology, regardless of our ages, in ways that improve our lives,” said Eric Clarke, chief executive of Orion Advisor Services. “Advisers need to be using technology to improve the client experience, to put them on par with the robo offerings available today.”

In fact, digital advice platforms are putting pressure on advisers to make the client experience more efficient and user friendly. They've already led to technology firms introducing improvements in making account openings easier.

For next year, in many cases, tech upgrades will be about providing services faster.

In one example, Redtail Technology in the spring will launch real-time communications for the adviser to be able to reach out and respond to both staff and clients using text messaging services built within its client relationship management tools.

All the communications will tie into an auditable trail, said Brian McLaughlin, chief executive of Redtail.

“Customers today want quick responses and this will allow everything to happen faster,” he said.

Along the line of real-time, and better, information, AdvisoryWorld will introduce a revamped proposal generation system early next year. It will incorporate not just a client's risk characteristics, but their financial goals, too.

“The investor will enter goal information and see almost real time what a portfolio might look like for them,” said Mike Wilson, president of AdvisoryWorld. “Then that information will be piped over to the adviser to bring home the sale.”

Other firms also said they are focused on improving client engagement tools later next year.

DOL COMPLIANCE

This year fintech firms introduced a rash of tools to help advisory firms meet the Labor Department's new rules requiring retirement advice to be in the best interest of clients.

Many focused on software to help assess risk tolerance, establish investment policies and pick investments that are best for clients, as well as monitoring and documenting the process over time.

Look for tech firms to continue presenting new products and tweaking old versions in 2017 to help advisers adopt new procedures that will make them compliant, as the rule is set to take effect in April 2017.

For instance, Orion is working on a fee benchmarking tool so advisers can compare the fees they charge a particular household with 1,000 other firms that use Orion's systems.

It will offer evidence for advisers to show they are charging a reasonable fee, as required by the DOL rule, but there's also a component aimed at the client, Mr. Clarke said.

“Advisers tell us they have clients come in and say they believe they're paying too much,” he said. “They'll be able to show clients what they charge compared to one million other advisory accounts.”

It's like showing a client the performance of market indices to compare with their portfolio when they think they should have earned a 20% return, Mr. Clarke said.

(More: The journey from financial advisers to tech entrepreneurs)

Fintech firms also will continue to focus on helping advisers provide more aggregated financial information to clients.

In one case, the Envestnet Tamarac platform next year will roll out further applications they gained from buying Yodlee in 2015. The new features will allow investors to view and co-manage a series of accounts, such as those of an entire household, said Stuart DePina, president of Envestnet Tamarac.

"The adviser of the future needs to demonstrate more value for clients through holistic wealth management," he said.

Even robo-advisers increasingly will see the need to offer more comprehensive advice, especially as the digital platforms increasingly attract investors with higher asset levels and more complicated financial situations.

“The next generation robo-customer is evolving so the automated platforms need to move towards creating a more comprehensive planning experience online,” said Steve Wallman, founder of Foliofn.

(More: Financial advisers must adapt quickly to competition from robos to stay in business: CFP Board)

He declined to offer specifics about what Folio Institutional, which offers a digital platform for advisers to use with clients, may have in the works.

But he said very short questionnaires are not going to put sophisticated clients on the right financial path.

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