Fintech looks to the future of financial advice at T3

Vendors pitched their latest innovations to prepare advisers for digital disruption

Feb 8, 2018 @ 4:22 pm

By Ryan W. Neal

If the theme of the 2017 T3 Conference was the fiduciary rule, 2018 was all about the future of financial advice.

Following a presentation Wednesday morning by Ric Edelman, the founder and executive chairman of Edelman Financial Services, on exponential technology, nearly every keynote presentation and panel focused on how advisers can future-proof their firm to keep winning clients in the face of rapid change.

(More: Ric Edelman looks into the future of financial advice)

"If you continue to give the advice to your clients that you are currently giving them, you will soon be out of business," Mr. Edelman said.

He discussed the vast amount of data now available and how that's driving the rise of artificial intelligence. To survive the disruption, advisers need to adopt this technology for themselves.

Several companies are rising to this challenge. Fidelity introduced new capabilities to consolidate multicustodial data to drive business insights and opportunities for advisers. Eventually, Fidelity hopes this data will power AI tools.

Quovo launched Cue, a new alerts engine that leverages Quovo's aggregation technology to notify financial advisers about account activity and client milestones. According to chief product officer Niko Karvounis, this will help advisers "take the right action, for the right client, at the right time."

MoneyGuidePro announced a new partnership with MX, a data aggregation provider, that lets advisers bring held-away assets into the financial planning software. MX is also contributing a suite of client-facing personal financial management tools to MoneyGuidePro.

Other vendors presented technology that can drive new business opportunities for advisers. For example, Riskalyze showed the retirement solutions platform it announced in October, which helps propose, onboard and manage 401(k) plans. And Orion demonstrated its new direct indexing tool.

LifeYield debuted a new scoring mechanism that advisers can use to show clients how tax efficient their portfolios are, properly named the Taxficient Score.

"By age 50, most investors have five or six different accounts managed by multiple financial advisers," said Mark Hoffman, LifeYield chairman and CEO. "With little to zero coordination between accounts, financial advisers could not analyze tax efficiency across all their clients' holdings. In addition, they lacked an easy way to communicate the value tax optimization and asset location provides. LifeYield's platform gives financial advisers a simple score, and the ability to devise an asset accumulation and spending plan to increase their clients' after-tax returns and income."

Mobile technology, cybersecurity and blockchain were all popular topics, but there was a noticeable lack of compliance technology. According to T3 organizer Joel Bruckenstein, the Department of Labor's fiduciary rule was a disruption that put other technology development on hold.

Now advisers and the technology vendors serving them are back to what's important — creating 21st century tools for 21st century investors. After 15 years of technology conferences, Mr. Bruckenstein said advisers are finally "starting to wake up to the fact that technology is one of the most, if not the most important component of their business."

"They need to spend a lot more thinking strategically and do a better job executing on those decisions," he said, adding that technology isn't just about buying the product, but getting advisers and clients to use it as well. "If you can enunciate clearly your value proposition and deliver it with 21st-century messaging, you're not going to have any problem attracting new clients."

eMoney Adviser addressed this with a new coaching to help advisers understand the value of financial planning and implement it into their firm, and for existing eMoney clients to get the most of their technology.

Mr. Bruckenstein is also looking to make T3 more than just a conference and technology blog. He announced a new job board for non-advisory jobs, such as operations and technology developers, and a virtual exhibit hall to help advisers shop for new technology if they can't attend an industry event.

Despite the emphasis on next-generation financial advice, J.D. Bruce, the president of Abacus Wealth Partners, felt too many of the technology vendors are building for existing problems rather than solving for the future. For example, after Mr. Edelman discussed how traditional retirement is dying, financial planning companies then presented tools for traditional retirement models.

"Someone is going to come in and disrupt the six or seven financial planning vendors who are all using Monte Carlo simulations," Mr. Bruce said. "The name of retirement is changing. No one is keeping up."

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