I left a great wealth management firm to start my own RIA over six years ago. This was a difficult decision, but I wanted to serve a slightly different market that I thought was underserved — the younger baby boomers and a lot more of my peers (Gen-Xers and some millennials) that fell under the radar of the top wealth management firms.
I started with zero clients. Needless to say, I didn't have a lot of client work at the beginning and I had very limited financial resources. With that extra time, I spent many hours reviewing the available technology providers to decide which would be best to buy. Looking back, having that extra time was sort of a blessing in some ways, as I had time to build out a solid group of technology partners to help me run a very efficient business behind the scenes, while providing a nice web portal and client interface from the beginning.
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I still read a fintech article just about every day because of my passion for technology and continual pursuit to give my clients a premier wealth management experience. Providing this experience requires relationship building and technical capabilities from a
financial planning and investment management perspective, but more than ever before, it requires regular technology investments.
The next generation of clients want an easy-to-use, digital, transparent and mobile interface to view their financial situation quickly, so they know whether they're on track with their goals.
Some of the firms I've used over the last six years (e.g., Morningstar Office, Tamarac, ByAllAccounts, MoneyGuidePro and others like them) continue to make advisers more efficient while providing better advice to clients. Fintech 1.0 was the cloud, paperless offices, reporting in real-time, efficiencies and integration in trading, rebalancing, CRM, etc. Today we are in the beginning years of Fintech 2.0. This phase seems to be the advent of the robo-adviser and the client/user experience.
I understand advisers have limited time and resources to try all the different fintech start-ups or explore the latest integrations announced in the headlines almost every day. So many companies try to be first to market with one piece of great technology, but many fail to bring practical tools that advisers can use immediately and integrate into what they already have without making a major change to their reporting system, CRM or client portal, for example.
THE MISSING PIECE
We are getting closer to true integration and coordination with the likes of
Betterment for Advisors, Tamarac, eMoney, Jemstep and Personal Capital, to name a few, but we are still missing integration on the detailed financial planning side of things.
One example of a missing piece for advisers to roll out to their clients today is an independent dynamic budgeting app that can be integrated with financial planning software (e.g., MoneyGuide Pro, eMoney, Advicent). This application should have dynamic daily reporting on spending and be continuously compared to your budget and savings goals. The idea is that this is then displayed and accessed on the client's main web portal. This also should be tied into your detailed financial plan and adjusted daily for changes in portfolio values to keep clients on track throughout the year.
There are great independent budgeting apps like MINT, Dave Ramsey's Every Dollar and Quicken, but they are stand-alone apps and really more of a retail product, where the client's information is used to sell other products to them.
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Some of this technology is built into the Betterment for Advisors and Personal Capital offerings, but using this technology requires advisers to give up on things like investment customization, your current reporting system and web portal for clients, more customizable rebalancing software, CRM and other pieces you and your clients may like already. I'm still searching for a solution to this dilemma.
As many advisers try to move toward a more comprehensive wealth management offering where all areas of financial, tax, college and
estate planning are the cornerstone of their advice (not just good investment advice), fintech companies are going to have to think a little differently in terms of what products are rolled out next. If they create them from a financial planner's perspective, who wants to simplify clients' lives and help them reach their goals, they may just have the next great fintech start-up!
Ryan Linenger is managing member of Linenger Wealth Management.
