Embrace technology, but beware of becoming obsessed with it

Technology that empowers advisers is a key component of a successful strategy, but it is not, in and of itself, a strategy

Apr 9, 2019 @ 3:12 pm

By Paul Saganey

Technology is important. As the world continues to embrace it, it is encouraging to see that our industry has caught the full force of the bug. Nearly every publication that covers the financial advisory profession today has a dedicated financial technology, or fintech, reporter. There are numerous fintech blogs, podcasts and videos. This is a good thing.

Even the robo-adviser phenomenon doused the industry's widespread complacency about digital client engagement with a face full of ice-cold water. Turns out we weren't quite ready to become "obsolete."

Perhaps we did overcorrect, though. Because while technology that empowers advisers is a key component of a successful strategy, it is not, in and of itself, a strategy. It seems that every multibillion-dollar firm like ours is falling over themselves to develop "proprietary" technology — the allure being that by doing so, they can attract advisers to their platform, with an eye toward eventually acquiring them or getting first right of refusal on their assets when they retire. It's a clever concept, but one that I believe will fall victim to the very obsolescence it portends to avert.

The thing about technology is, it is best left to technologists. We love technology at Integrated, but we rely on well-known companies like Orion, eMoney and Redtail, among dozens of others we're talking to and that our advisers are asking us to talk to, to create the tools that come together to form our tech stacks. Every adviser is different, and wants to run their business their way. So does it make sense to spend 20, 30, 50 million dollars to lock them all in to a custom-built technology offering? It makes no sense to me.

There is no tech that our advisers want access to that we will not thoroughly review, discuss and likely make available. There is nothing wrong about oohing and aahing over the hottest new fintech wizardry — we recently sent some members of our leadership team to Joel Bruckenstein's Technology Tools for Today show, and judging by their tweets, they were certainly smitten. But their after-action reports concentrated on whom we should partner with, not who we should attempt to become.

I feel strongly that advisers will not become obsolete — at any size. In fact, I generally find that smaller, more nimble advisers are better at marketing and social media and are hell-bent on growth to boot. Sure, they love technology, but they see it as table stakes and also place a premium on education, entrepreneurship, efficiency and exceptional client service. Technology helps them with this, but does not do it for them. Smart advisers know this.

Do advisers need to grow? Of course. Should they be striving to achieve scale and train teams to help serve clients to the best of their ability? Goes without saying. Can technology provide invaluable support? Certainly. Overreliance on it though, is a mistake.

(More: Top-performing advice firms have a distinctive focus on technology)

Clients are looking for a good experience, which is delivered best by advisers, backed by technology that is effective for their practice model. Advisers will always be challenged by existential threats, real, imagined and in some cases, fabricated. To neutralize these threats, advisers must focus on client service and growing their client base. Growth is not assured, no matter what your tech stack looks like. It boils down to your capability to offer expert counsel, to take care of your clients, earn their trust and to compel those clients to talk about you to others.

Frankly, I've never been tempted to build a fintech solution for our advisers, because I believe this implies that I presume to know what's best for all of them. Our firm has strong opinions on this topic — but we respect the individual makeup of our advisers' practices, and we help them optimize the technology, operations, compliance, investment management and financial planning tools that work best for them.

Advisers should be empowered to grow — on their terms, using their favorite tools. The power of choice in the independent channel has never as powerful as it is today.

So we'll leave the tech to the techies — and focus on the bigger picture.

(More: Starting a new advisory firm: Selecting technology)

Paul Saganey is the founder and president of Integrated Financial Partners.


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