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Positioned as the elephant in the room at Invest West, Ric Edelman (Edelman Financial Services) and John Bunch (Financial Engines) discussing how they have joined forces to build the USA’s largest RIA advice service. Self-proclaimed as the first of the robo solutions in the market, the proposition was built to help shift workplace 401K pensions from DB to DC plans and to help with fund selection and rebalancing. 330 registered financial advisers are currently serving more than 10million clients with an impressive 36 billion held in assets. With some advisers serving up to 500 clients each (which includes a diverse mix of low investors and millionaire clients) they have had 150,000 potential new clients reach out to them for help this year. The financial planning element is based on automated “robo” algorithms which are not standardised or off the shelf like some others. They currently have 883,000 personalised portfolio algorithms available which have been developed over the last 20 years. Their view is that they are still a few years off being able to deliver a fully automated holistic advice service. However, from what we are seeing currently being developed in the UK market, we may disagree. Ric and John have a great ethos which states that everybody deserves financial help. Although they typically have a $5,000 entry AUM per household, they will take clients who have less to invest and will often work on a pro-bono basis. They state that these may not be the ideal or best client today - but might be in future. What a refreshing approach to offering affordable financial planning to all. All clients are treated the same regardless of the amount of money they have to invest. There is a flat fee of $800 for the financial planning, and all clients go through the same financial planning process. They do not run TV adverts or structured marketing plans. They do have financial planning education though, which they offer through all channels - which is free to all consumers. Ric has just published a children’s book to address financial literacy aimed at 4-8yr olds (The Squirrel Manifesto, which is available on Amazon - https://www.amazon.com/Squirrel-Manifesto-Ric-Edelman/dp/1534441662/ref=sr_1_1?ie=UTF8&qid=1544153861&sr=8-1&keywords=the+squirrel+manifesto
Ian McKenna posted a blog entry in Ian McKenna's BlogAfter the frantic pace of day one, T3 became more reflective during its second day. A range of key industry thought leaders provided challenge and analysis that put many of the previous day's announcements in suitable context. What follows is a summary of just a few of the key messages and insights shared. The tone was set by industry veteran Bob Veres www.bobveres.com @Bobveres. Clearly unafraid of challenging conventional wisdom Veres began by pointing out that growth in the investment industry is stalling as planners are failing to build models and services that are attractive to millennials. He highlighted that frequently those who were most innovative in the 1980s and 90s have become the main constraint on change in their businesses today, particularly by failing to listen to young people within their firms. Older advisors were encouraged not to try and design services for younger consumers themselves, but to give their young colleagues the challenge of building solutions for their own generation of customers. Returning to what has become a recurring theme at T3 he compared traditional client on-boarding procedures to a root canal operation and highlighted the importance of adapting customer interaction to align with changing day-to-day behaviour, for example replacing a quarterly one hour face-to-face meeting with more regular five-minute Skype conversations. Later in the day Ian Sheridan from Vestigo Ventures www.vestigoventures.com @VestigoVentures and Andy Putterman from 1812 Park @1812Park ran a similarly challenging session looking at issues firms need to consider if they are to be successful in servicing customers in 2025. Sheridan highlighting his considerable experience with preference algorithms and big data, explained how by monitoring vast amounts of data (4 billion lines of code 20 million interactions and 720 million profiles a day) customer behaviour can be accurately predicted and so facilitate the design of highly personalised solutions. Putterman challenged advisors who may be tempted to ignore millennials as clients today, because of their lack of investable assets, to find different operating models as by the time young customers have accumulated the assets advisors seek, millennials will also have found other advisors. Delegates were encouraged to build relationships with customers while they have debt, to build loyalty for the future when they will have accumulated savings. During the day I also had a chance to take in a number of demonstrations. Tolerisk www.tolerisk.com @tolerisk presented a standalone risk profile link proposition that includes capacity for loss analysis; something which usually needs to be addressed by a separate cash flow analysis. They are a relatively new player but well worth a look. I spent some time with Steve Ambuul of Asset-Map www.asset-map.com @AssetMapLLC who have an attractively simple interface for helping focus clients around key decisions they need to take. Good stuff. Similarly Edward Dressel www.asktrak.com @ask_TRAK of Trust Builders provided me with an overview of their 401k and 403b illustration tools which are also worth exploring. The standout presentation of the day for me came from Jason Gordo of FinLife Partners www.finlifepartners.com the standalone white label software solution that is part of United Capital www.unitedcp.com @United_Capital. I’ve known Jason since his days at Flexscore (www.flexscore.com) and always found him to be a true innovator when it comes to creating simple solutions which help customers address key decisions. In this session he suggested that in the future firms will be valued by “information under management” rather than assets. Finlife’s software which can be found at www.findyourmoneymind.com is a delightful gamification tool. It aims to build an “Honest Conversation” with the customer and encourages clients to focus on their real priorities and particularly identify where couples may have different priorities. Gordo says it aims to be “At the intersection where life and money meet. Enabling customers to have clarity confidence and control over their financial life.” This is really all about building an understanding of consumers real priorities, delivering financial advice as something that touches their day-to-day lives in a way clients' understand and are comfortable with, rather than talking at consumers using a language they don’t understand. In my experience all too often financial advisors become so bound up in what they consider fascinating, it’s all too easy to leave the client confused. Honest Conversations takes financial advice back to basics and is clearly a very powerful tool for building trust. Although just one part of the FinLife Partners offering it is well worth a detailed look. So those are the highlights of my second day of T3 2017; I hope they are helpful.