Do financial advisers need mandatory technology adoption?

Fintech can't work if it's not used, but not everyone agrees whether to use carrots or sticks

Nov 4, 2017 @ 6:00 am

By Evan Cooper

Financial advisers, custodians and broker-dealers joined InvestmentNews for a Technology Think Tank Sept. 13 - 14 to discuss the latest in emerging technologies.
+ Zoom
Financial advisers, custodians and broker-dealers joined InvestmentNews for a Technology Think Tank Sept. 13 - 14 to discuss the latest in emerging technologies.

Technology can work many wonders — as long as it is used. One persistent problem in the advice business, however, is the relatively low rate at which advisers adopt new technology. Could adoption be mandatory? Participants in the Technology Think Tank Sept. 13 - 14 wrestled with the issue.

"We roll out an end-to-end technology that works, and we go back to clients in six or 12 months and find 35% adoption. We find the constant communication very hard to do," said Tom McCarthy, head of platform technology at Fidelity Institutional. "The second piece is that some advisers want us to give them more tools so they can do straight-through processing, and others tell us they want us to do the work."

Schwab Advisor Services is equally frustrated. "Most custodians would like to apply the carrot-and-stick approach to adoption, although I certainly see why the stick side of things is appealing," said Ed Obuchowski, senior vice president for technology solutions at Schwab Advisor Services.

His firm uses a carrot: offering lower commissions if firms go paperless.

(More: Broker-dealers debate big data and other technology promises)

David Ballard, chief operating officer at Cetera Financial Group, said tech firms and custodians need to keep in mind that their tools are not the only ones broker-dealers deploy for advisers and ultimately, investors.

"We've been working really closely with a lot of partners in the room, and we appreciate their help. But you have to remember that your solution is a piece of the puzzle, not the whole thing," he said.

Firms need to create user experiences that are consistent, which requires that vendors provide "parts that allow us to embed their solutions into that experience," Mr. Ballard said.

Participants suggested possible carrots. One is to make adoption a competition.

"If you show advisers adoption scorecards, it helps," Mr. Obuchowski said. "We used scorecards to increase adoption for our eAuthorization for wire transfers. Explaining how it eliminates fraud and then really communicating that to advisers helps, but getting to them early and being transparent with the metrics of adoption is critical."

(More: America's digital financial habits disappoint)

Raef Lee, managing director and head of new services and strategic partnerships at SEI Advisor Network, said SEI has found success with WalkMe, a digital adoption platform that "gives you the information you need as you need it, to do whatever the next task is."

It also helps with adoption when experts thoroughly explain SEI's workflow programs to advisers so they are able to build best practices into what they're doing, Mr. Lee said.

Gabe Muller, chief operating officer at Glassman Wealth Services, said getting advisory firms to boost the use of technologies isn't complicated. "To increase the adoption rate, you have to create a culture of adoption," he said.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Griffin Capital's Anderson: Economic themes for 2018

What's ahead for 2018? How will it impact the markets and investing? Griffin Capital's Randy Anderson offers his perspective.

Latest news & opinion

House passes tax bill, focus turns to Senate

Tax reform legislation expected to have more of a challenge in upper chamber.

SEC enforcement of advisers drops in Trump era

The agency pursued 82 cases against advisers and firms in fiscal year 2017, down from 98 the previous year.

PIABA accuses Finra of conflicts of interest

Public Investors Arbitration Bar Association report slams self-regulator over its picks for board of governors.

Betterment launches 'free' charitable-giving platform

Robo-software provider lets investors donate directly from their accounts, and will not charge charities with less than $1 million on the platform.

Cole Capital, once part of a company coveted by Nicholas Schorsch, is being sold

Vereit, formerly American Realty Capital Properties Inc., is selling Cole Capital as it exits the nontraded REIT business.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print