What's the next emerging technology for advisers?

Fintech firms to embrace Alexa, holograms and more to help advisers deliver financial help to clients

Nov 4, 2017 @ 6:00 am

By Evan Cooper

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The current and future states of adviser technology were the subjects of two hour-long sessions at the InvestmentNews Technology Think Tank held in September in New York. In each session, participants were asked to identify their firm's top tech-related challenges and opportunities — first tackling those issues they face now and then turning to future concerns.

Next participants discussed with their tablemates some of the problems that could be addressed or solved through the use of technology. After the discussions, a representative of each table presented their findings to the group.

Some of the group's key technology-related observations are below.

Artificial Intelligence

Visions of the impact of artificial intelligence (AI) on financial advice range from the dystopian — human advisers driven out by robots — to the idyllic, with new and more complete information and analysis available at every adviser's fingertips.

While Think Tank participants did not rule out the possibility of some AI development radically changing the delivery of advice, they believe advisers will remain at the center of the business.

"AI can take the friction out of executing financial decisions, but I don't think it will ever remove human emotion from those decisions — which is why helping with those decisions is what becomes the job of the financial adviser," said Paul Metzger, chief technology officer at Dynasty Financial Partners.

Patrick Yip, business technology officer at Pershing Advisor Solutions, said AI's value will come in helping advisers be more efficient by predicting client reactions to events and suggesting which clients might need personal assistance immediately and which would probably be more satisfied with an email or a text message.

Another area where AI's predictive abilities may prove invaluable is in the area of fraud detection.

"If a client does X, Y and Z, and the next day they do A, B and C, that could be a fraud event," said Ed Obuchowski, senior vice president for technology solutions at Schwab Advisor Services. "AI, which means that the system is always learning, could become a highly valuable way to address several customer-related issues. Internally, there also are huge operational efficiencies that can be gained when computers are taking a look at workflows and telling you that one is taking a minute to accomplish while another is taking 10 minutes."

Finally, AI may play a role in understanding clients in a prescriptive sense.

"It may be able to predict the likelihood of divorce, for example, or whether the clients' kids will go to college, as well as outcomes related to age and health," said Thomas Phelps, vice president of corporate strategy and chief information officer at Laserfiche.


Whether it's Amazon's Alexa, Google's Home or Apple's Siri, intelligent voice-based assistants are fast becoming a major way many people communicate with the internet. Think Tank participants observed that these devices will have an influence not only on how advisers and their firms distribute information to clients but also on how firms communicate with advisers.

"For all of us, the big issue that Alexa and the other voice-recognition devices raises is how we should think about and design user interfaces," said Rich Cancro, founder and chief executive at AdvisorEngine.

If Siri or Alexa will be able to tell clients the value of their accounts and how well they are doing on the road to meeting their investment goals, as well as answer other investment and financial questions posed by users, the nature of conversations with real-life financial advisers undoubtedly will change.

Amazon, Google

In the Broadway musical and movie "My Fair Lady," professor Henry Higgins wondered why women can't be more like men. Today, everyone seems to be wondering why everything can't be more like Amazon or Google — faster, easier, seemingly more transparent and cheaper. With these giants transforming every consumer-facing industry they touch, the big question on the minds of financial advice leaders is whether or when these tech giants will decide to enter the financial advice business, and what that would mean.

DAY 2: ADDITIONAL ParticipantsRich Cancro, chief executive, AdvisorEngineLinda Ding, director of strategic marketing, LaserficheLori Hardwick, co-founder and president, A.I. LabsEd Obuchowski, senior vice president for technology solutions, Schwab Advisor ServicesThomas Phelps, vice president of corporate strategy and chief information officer, LaserficheCraig Ramsey, chief operating officer, AdvisorEngineBrandon Rembe, managing director of technology, Envestnet/TamaracCameron Sheehan, vice president for practice management consulting, Envestnet/TamaracPatrick Yip, business technology officer, Pershing Advisor SolutionsMike Zebrowski, chief executive, A.I. Labs

Think Tank participants agreed that regulation is a barrier, since investment advice is such a heavily regulated business and tech giants thus far have preferred to enter markets that are relatively unfettered. The potential for brand damage and customer litigation is another consideration keeping tech firms at bay. And research the tech giants may be conducting, as well as the voluminous data they gather, may be showing that while many people would be interested in conducting financial business with a Google or an Amazon, they still want to consult with a real, knowledgeable person.

The tech firms' entry may come in a less direct way, however, perhaps through the sale of detailed customer information to financial services firms, who could profit from today's big data version of the bedrock know-your-customer principle.

"It's been difficult for our industry to monetize data, so it will be interesting to see what happens," said Lori Hardwick, co-founder and president of A.I. Labs.


Bitcoin may or may not take off as an alternative currency, but the blockchain technology on which it is based is here to stay.

"Everybody has been looking into blockchain technology," said Pershing's Patrick Yip. "It's a huge disruptor for anyone who handles payments in our business, and some people are even wondering about the need for clearing firms if buyers and sellers could just transact and access a safe public ledger that everyone can verify."

Blockchain technology also may affect the industry's intellectual property, said Mr. Metzger of Dynasty, since ideas or content embedded in a blockchain of data become public.

Bitcoin itself, the most visible aspect of the blockchain, and other types of electronic currency, provoked speculation.

"I've told my clients they'd have to fire me if they wanted me to handle bitcoins for them," said David Edwards, founder of Heron Wealth.

Sam McIngvale, head of strategy at Apex Clearing Corp., said he has owned bitcoin for a while and thinks of it as a fascinating experiment. "It's an incredible network of people thinking about the future of money. They're a little kooky and much further out on the spectrum than we can even imagine, but if they achieve 10% of what they are aiming to achieve, so much will change," he said.

ID verification

As cybersecurity becomes a top priority for the advice business, issues such as identity verification become increasingly important. But increasing the safety and security of client accounts often comes at the price of more cumbersome access and client frustration. Technology may provide a solution.

"There are a lot of emerging technologies that will allow for frictionless ID verification for a transaction or whatever else the client wants to do without having to ask him or her for a login password, which is horribly insecure," said Kol Birke, a senior vice president in charge of technology strategy at Commonwealth Financial Services.


Many Think Tank discussions about challenges came under the broad umbrella of standardization. Whether that involves standardizing the way accounts are opened or the tools advisers use or even something as basic as the way investment products are described, participants felt that having industry-wide standards for a variety of processes and information flows would greatly enhance technology's ability to improve efficiency.

But standardization flies in the face of choice.

"This industry was built on choice," said David Ballard, chief operating officer at Cetera Financial Group. "That's why there are so many CRMs, imaging systems, custodians and everything else. In order to streamline and provide an experience that's predictable yet produces a 'wow' factor, we need to start narrowing the landscape and controlling how everything interconnects in order to improve the user experience. That involves eliminating some choices and standardizing data elements."

However desirable it may be, standardization faces obstacles due to adviser reluctance.

"When I talk about how we can all do better if we adopt certain standards, my guys disagree," said Matthew Regan, chief operating officer at Wescott Financial Advisory Group. "They say that they are providing a bespoke service and that's where the value is. So that's the conundrum: We all know that if we adopt standards we can be more efficient and do a better job, but there's the issue of the value added by advisers."

Virtual reality

What if advisers could be virtual? Technology soon may be able to offer life-size holograms of an adviser that could appear in front of clients and interact with them. Although it sounds like something out of a Hollywood special effects lab, the technology may be closer than we think.

"Today we have video, but what if tomorrow you could have a hologram of an adviser sit down with you and your family and have a conversation — even if the family is in Florida and the adviser actually is in San Francisco?" Mr. Ballard asked. "Wouldn't that be great?"

Evan Cooper is a contributing editor at InvestmentNews.


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