In|Vest 2016 roundup: What advisers need to know about digitization

Posted by on

While only in its second year, In|Vest 2016 did not disappoint as SourceMedia brought together top- notch industry thought leaders and innovators. Unsurprisingly, the major theme echoed throughout the conference was that technology is here to stay and will only bring more disruption to the industry – advisers need to get on board or risk being left behind. Below, I’ll discuss key wealth management advice and trends covered over this two-day event, and what advisers can learn from them.

Technology provides advantages and opportunities for advisers.
With some debate over whether robos can/will replace human advisers, it’s worth expanding on the benefits offered by these digital advancements. David Canter, executive vice president, practice management and consulting at Fidelity, noted that technology, when used appropriately, can impact advisers’ bottom line by providing better client engagement, enhanced services and increased productivity.

According to Fidelity’s benchmarking studies, almost 28 percent of advisers’ assets are concentrated in clients over 70 years old. On the other hand, millennials have surpassed baby boomers in population, accounting for 77 million people. If advisers want to reach this huge audience, they have to use technology.

The “death of geography” – as explained by Joe Duran, CEO of United Capital – is another factor at play. The biggest competitive advantage that most advisers have is that they are in the neighborhood of their clients, but that’s disappearing as technology allows advisers to reach people (both geographically and demographically) who they couldn’t before. It also provides new ways to interact more dynamically with existing and prospective clients, making business more effective.

The digital era poses a new value proposition for advisers.
Mitchell Caplan, CEO of Jefferson National, discussed the advice gap within financial services, explaining that there aren’t enough wealth managers or planners who are thinking more holistically about advice. Many speakers shared this sentiment – it’s not just about investment returns; advisers should provide guidance beyond money, taking into account each client’s life goals. Fidelity’s Canter talked about the life/wealth continuum, highlighting a transformation from wealth management to life management.

Jon Stein, CEO and founder of Betterment, stated that advice is incredibly (and increasingly) valuable. According to a Schwab study, 67 percent of participants would like personalized advice in their 401(k) plan, but only 12 percent are actually receiving that advice.

Financial advice is an area of opportunity for advisers if they can pivot to think more about their clients’ entire lives in order to add true value in today’s rapidly expanding technology-driven market.

Humans and robos can coexist.
Stein mentioned that he doesn’t think it’s about humans versus robots, and it’s actually never been. Mike Sha, CEO and co-founder of SigFig, explored the idea that we have always believed there are things humans do well and things that robos do well, and that each does those respective things effectively in different ratios, depending on one’s wealth. He continued, explaining how much human and automated interaction has been dictated by the industry based on what is profitable, but that doesn’t mean consumers think the same.

Stephen Wendel, head of behavioral science at Morningstar, shared that digital platforms have unique touch points that are both powerful and dangerous: Power as a coach – at the moment you are thinking about doing something, digital platforms can help you – and danger because you can destroy your portfolio in an instant. For him, digital has just upped the stakes, but it’s not necessarily for the better.

Duran also weighed in on this theme, spotlighting that when the stakes are higher, people matter. He explained humans act as a pilot because if something goes wrong, which it will, you want to know there is a steady hand at the wheel to correct it. He also drew on examples of how technology has impacted other industries, paralleling how lawyers are still around even with Legal Zoom.

The bottom line: Advisers should consider welcoming technology and exploring ways it can enhance their business, looking at what value they are adding beyond returns and knowing that robos can inhabit the industry alongside them.