T3 Enterprise conference: Race to zero a popular topic

One of the biggest themes of the 2019 T3 Enterprise conference, which caters to technology decision makers at banks, broker-dealers and adviser networks, wasn’t even about technology.

An undercurrent at many of the panel discussions was the so-called “race to zero,” which escalated earlier this month when several of the custodians and discount brokerages eliminated trading commissions.

As banks and IBDs wonder how to remain competitive on pricing, Dynasty Financial Partners CEO Shirl Penney said he thinks the elimination of commissions won’t be a big deal for advisers in the long run. Eventually custodians will find ways to make up the lost revenue, such as charging advisers to use the technology platform, Mr. Penney said.

What matters more is for firms to double down on the two things that aren’t at threat of commoditization: competent advice and quality client service.

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“How do you help advisers deliver higher quality, more competent, broader, integrated advice in a differentiated way?” Mr. Penney said. “If you can answer and speak to those two issues, it puts you in a position exponentially to win going forward.”

Technology plays a critical role in doing that, he added. One thing that has been successful for Dynasty, which helps advisory firms leave wirehouses and go independent, has been new digital marketing technology for advisers.

For example, Mr. Penney said Dynasty created a marketing campaign targeting executives at pre-IPO companies on LinkedIn. The result was 36 meetings pre-populated on advisers’ digital calendars, a 50% close rate and $29 million in new assets. The whole program cost $800.

“You just have to know how to use the tools that are out there,” Mr. Penney said. “The digital marketing piece has been really exciting and helpful.”

In a separate panel, executives from BNY Mellon Pershing and First Clearing, the operations arm of Wells Fargo Advisors, echoed the sentiment that custodians are going to have to make up lost trading commission revenue elsewhere. Instead of trying to find new revenue, Pershing managing director of technology Raj Madan and First Clearing president John Peluso said their firms are focusing more on improving the existing services they provide advisers.

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For Mr. Madan, that means doubling down on technology integrations. For Mr. Peluso, it means offering technology that helps firms build deeper human relationships and grow business organically.

“We need to make sure that technology is actually bringing advisers and clients closer together instead of separating them,” Mr. Peluso said. For example, he thinks the advice industry can better take advantage of digital video technology to improve client communication and education.

Free trading makes it more important than ever for banks and broker-dealers to embrace financial planning, said T3 president Joel Bruckenstein. With the two most popular planning fintechs, eMoney and MoneyGuide, getting purchased by Fidelity and Envestnet, respectively, Mr. Bruckenstein said he sees an opening for exciting new players to gain market share among institutional firms.

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“Advisory firms, IBDs and banks need something else that they can sell that’s meaningful,” he said.

So while many financial institutions are still working at solving the same problems they’ve faced for years — integration, better client experience and getting advisers to actually adopt the technology tools the firm invests in — that doesn’t mean innovation has plateaued in the adviser fintech market.

“I just think there are new and interesting companies coming into this space,” Mr. Bruckenstein said. “There is money flowing into this space, there’s funding in development, and it continues to help people innovate.”

Related Topics: Charles Schwab & Co., TD Ameritrade Institutional, Wells Fargo & Co.