Joel Bruckenstein discusses how technology will disrupt the status quo in financial advice

Advisers need to look at other industries that have adapted successfully, Mr. Bruckenstein, the president of Technology Tools for Today, said at the Insider's Forum conference.
SEP 07, 2017

The rapid evolution of technology is a reality that the financial advice industry must embrace not just to thrive, but to survive, according to Joel Bruckenstein, president of Technology Tools for Today. "I don't think most advisers are worried enough about the technological changes taking place in other industries, and how they are going to affect the advice industry," said Mr. Bruckenstein, speaking Wednesday in Nashville at the kick-off of the Insider's Forum conference. Beginning with cybersecurity, which he called "one of the biggest threats to all industries," he reminded the audience of financial advisers that "your clients are probably the weakest link in your chain when it comes to preventing cyberattacks." With that in mind, Mr. Bruckenstein said advisers need to take a proactive approach toward educating clients. He cited research showing that 66% of advisory firms are providing cybersecurity education as part of client meetings, which he says is not the best strategy. "Only 9% of firms are doing cybersecurity education through webinars and conference calls, which I would argue is a more productive way because it's scalable and the message is more uniform," he added. (More: Cybersecurity looms as adviser business threat) In terms of the way technology is going to continue to disrupt the status quo of the financial advice industry, Mr. Bruckenstein said advisers should pay attention to the way other industries are embracing new technologies. "The way we pay for things is changing, and I'm not just talking about Bitcoin," he said. "The way we borrow is already changing, the way we evaluate investments is changing, the way insurance is sold is changing, and the way you attract clients will change." On the topic of digital advice platforms, he challenged advisers to acknowledge and embrace the threat of robo-advice. "It's a myth that robos are not a threat and that your firm doesn't need a digital solution," Mr. Bruckenstein said, citing the success of firms like Schwab and Vanguard that have adopted hybrid models combining digital advice with human advisers. While he doesn't subscribe to the notion that automation will completely replace the human financial adviser, he does believe human advisers will need to adapt and stay nimble in order to remain relevant to a changing client base. "Financial planning will play a much larger role in the advisory firm of the future, and computers will handle a lot of the tasks that are manual today," he said. "And I think cost pressures will continue." (More: Custodians are charting fintech's future) And when it comes to thinking outside the box, Mr. Bruckenstein said advisers need to get beyond the boundaries of their local zip code. "Mobile and video are erasing all the geographic barriers, so there's no reason any more to be marketing to just your local area," he said. "That fact can be an opportunity to expand, or a threat because other firms will be able to compete in your local area."

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