Hyper-personalization, the user experience, and socially responsible investing, are topics tossed around a lot in the advisory community lately, and they were key themes discussed at the InvestmentNews’ inaugural Next Gen Summit on Thursday.
Investors expect advisers to provide the same personalized user experience they get when Netflix recommends another show at the end of binge-watching a series, or when Amazon prompts products that match recent search histories.
When it comes to user experience, an adviser’s tech stack is being compared with innovative fintechs like Robinhood. “Robinhood forced the industry to really take a hard look at itself in terms of user experience,” said Cory Haberkorn, senior manager of Global Go to Market-Wealth & Asset Management at Salesforce, at the four hour virtual event.
Technology, in turn, is the catalyst that enables advisers to provide clients a hyper-personalized and easy-to-use user experience, which the next-generation of advisers and investors deem as a critical component for any service provider they choose to work with.
“Independent advisers are really well positioned to provide this level of personalization,” said Kartik Srinivasan, senior managing director of third-party integration at Charles Schwab. “They provide that human element that allows this personalization, and then the digital element to the technology tools that advisers choose really allows them to provide that great user experience and scale their business.”
Speakers at the event chaired by Next Gen advocate Kate Healy, said there are a few ways advisers can show clients their ability to cater to that personalized user experience. One prominent way is to home in on the trend of environmental, social and corporate governance investing, according to panelists during the virtual event.
“If it’s a priority for a client, the adviser should be able to support them,” Srinivasan said. “We have a lot of ETFs and mutual funds in the industry now that provide this capability. But again, it can be a little difficult maybe to find the right investments.”
To that end, Srinivasan recommends new tech tools that have popped in to help. For example, Morningstar has done a lot of work here with ESG investments, building screeners and research while providing analysis into ESG investments, Srinivasan said.
“Another, newer, entrant into the space that we've seen is Act Analytics” he said. “They provide a lot of different capabilities and their own methodology around various factors when it comes to ESG on various investments. And so I would throw those two as examples of firms that are doing a great job in the ESG space.”
Fintech giant Envestnet, too, announced last year it joined forces with Federated Hermes, Inc. to launch the Federated Hermes PMC Impact Portfolios to create a suite of model portfolios with ESG-integrated investment strategies.
Envestnet also worked in collaboration with The Investment Integration Project to publish a series of comprehensive educational resources about impact investing for financial advisers, the company announced on Thursday. These educational materials on impact investing trends, strategies, and products — and how advisers can begin discussions about them with clients — are available on the PMC website.
These types of educational tools are critical for advisers to embrace ESG-investing strategies and cater to their next-generation investor client, Haberkorn said. The problem is the industry is still very reactive to ESG, when advisers should be proactive and integrate ESG into their strategies from the beginning.
“The mutual funds and exchange traded funds are out there, but in terms of the wealth management or brokerage industry and how advisers are with ESG, we're still in that response phase, generally,” Haberkorn said. “If a client is asking for it, yes, we can help them and yes, we have access to these tools. But I haven't seen too many full fledged marketing angles to help advisers.”
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