3 'must do's' from the T3 Conference

If you don't move now to be one of these “business-like” advisory firms and adopt technology, you can kiss your “practice” goodbye

Feb 17, 2015 @ 1:03 pm

By Steve Sanduski

"If you run a business, you're fine. If you run a practice, you're done." — Edmond Walters, eMoney Advisor

Are you a technology company or an investment management company? When I asked this question to the head of a robo-adviser firm at the T3 Conference, he said without hesitation that they're a technology company.

Think about the implications of that. How long will you be able to thwart the threat (opportunity) from the exponential march of technology in the financial industry?

Daniel Satchkov, president of RiXtrema, captured the potential of robo-advisers when he showed a slide mashing-up the "6 Million Dollar Man" with today's robo-adviser.

As the slide above shows — and was confirmed in a conversation I had with Jon Stein, co-founder of Betterment — robo-advisers can manage 10,000 clients per client-facing staff member. What's your number? 100? 200? It's scary!

Mr. Walters of eMoney Advisor has it right. You can no longer look at your business as a “lifestyle practice.” Your clients deserve the very best technology, advice and service. Anything short of that is a breach of client trust.


Here are three “must do's” from the T3 Conference that will help you build a business that is sustainable and worthy of your clients' trust.

1. Implement a robo-adviser strategy. Robos have quickly morphed from direct to consumer companies to B2B companies. They have tremendous technology that enables you to efficiently onboard new clients and manage their money in a very pleasing client interface. Take advantage of it by implementing a robo platform into your business from Jemstep, Betterment Institutional, Upside Advisor or any of the dozens of other firms competing in this space. In some cases, you can even use your own models on the robo platform. And while you're at it, consider incorporating a portfolio risk management strategy from Riskalyze or RiXtrema and a cloud-based planning program from a firm like Advizr. These are value-added services the robos don't offer today.

It's critical that you have a well-thought out robo strategy. I believe this is the single most important decision you'll make in your business this year.

2. Offer a “consumer grade” client interface. Firms like Uber, Airbnb, Amazon, Mint and Netflix are spoiling consumers with beautiful and easy to use interfaces. If your idea of a client interface comes from your custodian, you're toast. eMoney Advisor, Oranj, the robos and others have offerings that can keep you on par with the best of the consumer-facing firms.

At a minimum, you need to offer account aggregation and an easy way for clients to see their entire financial life in one user-friendly interface.

3. Educate your clients. The old “adviser knows best” model is dead. Clients of the future are doing serious online research before they hire an adviser and want to feel confident in their planning decisions. They want to collaborate with their adviser, not simply be told what to do. Get ahead of the curve by becoming a content marketing machine and populate your website and social channels with solid, meaty educational content that your future clients can absorb. Firms like Advicent and Belay Advisor (disclosure: Belay Advisor is my firm) offer content and services to promote your expertise through various channels.

Counter intuitively, giving away some of your best advice online is one sure way to get more business.

I've been in this business for more than 20 years and there's no question that the speed of technology innovation right now is the highest I've ever seen. You may think you can continue to coast to retirement but you're dead wrong.

The new technology firms are super-aggressive and the top advisers in the industry have woken up to the fact that now is the time to make massive investments in their business.

Just like we have income inequality in our country, we have adviser inequality. The top advisers are innovating and rapidly gobbling up the lion's share of new business. If you don't move now to be one of these “business-like” advisory firms and adopt technology, you can kiss your “practice” goodbye.

Steve Sanduski is a New York Times bestselling author and president of Belay Advisor. Follow him on Twitter @SteveSanduski or connect on LinkedIn.


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