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This week I am in New York for the opportunity to see the very latest wealth technology innovations and to hear from several of the industry leaders who are transforming the way Americans access financial advice. Now in its third year, the In|Vest conference provides a heady mix of powerful tech demonstrations and exceptional thought leadership. For me the big message on day one of the show was machine learning and artificial intelligence is now part of the emerging landscape. In what follows I will highlight some of the early leaders. The volume of these offerings on display makes me feel the US may again be pulling ahead of the UK in FinTech and especially WealthTech. After a brief opening where Salesforce highlighted that their forthcoming 2017 Connected Investor research will identify that 47% of investors would be happy for artificial intelligence to used by their wealth management firm the day began with a whirlwind of demos of disruptive technologies. The videos of these will be up on the In|Vest website at http://conference.financial-planning.com/conferences/invest/ in a few weeks but in the meantime here are my highlights. First up was Salesforce with their Financial Services Cloud providing great visualisation of relationships, interactions and delivering insight. It is clear from the number of integrations Financial Services has in the US that the American proposition is a long way ahead of their UK offering but this does give an indication of where Salesforce may be in the UK in a couple of years. That said while the system can offer some awesome integration of consumer data I wonder how much of this would be allowed in Europe post the introduction of GDPR next May. This makes me wonder if the European Union and Fintech are on a collision course. I am increasingly worried that the excesses of GDPR and the EU’s inability to produce timely regulation could seriously damage the EU Fintech industry. Robert Stanich of IBM Watson showed how machine learning can identify clients at risk of leaving and how using artificial intelligence can transform client segmentation all beyond recognition. The service can also predict real life events and related product opportunities before your clients realise they have these needs. Watson has the potential to transform lead management so your existing data becomes your primary source of new business opportunities. Oranj showed a great onboarding experience with held-away data and risk profiling but fell foul of the eight-minute rule so ran out of time to show their full services. Comarch showed a very cool voice-controlled interactive artificial intelligence chatbot called Devra. Advicent showed great life protection tools they have built which makes me wonder why the cool omnichannel protection service they built for Scottish Widows never saw the light of day. An opportunity missed. MX then arrived to show why they do aggregation, categorisation and user interfaces for Personal Financial Management better than anyone else in the world. It is a great shame they don’t want to come to the UK as they have so much business in the States. Circle Black, a company that is entirely new to me, showed a stunning client facing tool set with API integration into Redtail, MoneyGuidePro, Riskalyze and many more. Fidelity owned eMoneyAdvisor showed new marketing tools advisers can adopt to transform the way they use and manage social media and then onboard the resulting new clients. I continue to believe there would be huge benefits in Fidelity bringing their offerings to the UK. InvestCloud showed some of the over 200 Apps their adviser clients can use. I love the vast amount of data they are making easily available to their users and the virtually endless look, feel and design features advisers can adapt. They are featured in the next update of F&TRC’s Adviser Software Insights study and have just set up an innovation centre in London so I will probably be looking at them in far more detail soon. Riskalyze describe their role as protecting consumers against their worst decisions. I am a big fan of how they present risk to clients. To me it is so much better than stochastic pods. This is all about talking to clients in ways they understand. Their Autopilot approach with its One-Click Fiduciary makes a great case for the FCA reviewing the UK client money rules as it can offer better consumer outcomes at significantly lower cost. One of the biggest moments of the day for me was Hello Wallet founder Matt Fellowes, the man who transformed financial wellness presenting his United Income business which aims to transform retirement income. This makes it beautifully simple to understand how clients are doing then build and achieve financial life goals. It is great to see United Income building plans taking consumers to +100 years stretching savings to match increased longevity. I was also impressed by DataRobot who are delivering a quick way to benefit from artificial intelligence, something I believe advisers can make huge gains by embracing Onist were one of my favourites from Finovate Spring and it is great to see them at In|Vest with their Family Office for the masses. I would love to see some of the artificial intelligence tools shown here added to Onist. The afternoon session was opened by one of the most compelling speakers in the US advice market, United Capital ‘s Joe Duran. Outlining why advice firms need to be both extremely human and extremely digital, whilst insisting that the planning process can be fully digitized, he argued humans need to do to things machines cannot i.e. provide empathy, understand human behavior and provide expertise and judgment to help with complex decisions. Charles Schwab CTO Timothy Heier pointed out we are no longer in mobile first phase, now it must be artificial intelligence first. This shows the era of AI in financial advice is now upon us. Mark Goines from Personal Capital highlighted that 65% of people who ever linked an account are still connected to them because they give them constant updates of good insights. He was followed by Bill Crager of Envestnet, who own Yodlee, who believes that a key component of building advice relationships with clients in the future is about giving consumers an integrated financial plan updated every day. This will actually provide a very gamified experience and I can see how it would have a similar effect to social media, we all want our regular fix of information and can’t resist looking at it regularly. These will bring together consumers short term and long term financial lives with information they want to access regularly. Crager sees artificial intelligence delivering answers to financial questions based on the data the adviser will have aggregated via these services. These last two issues are very relevant to the challenges that will emerge as banks re-enter the financial advice market which I will be exploring in my Money Marketing column next week. Through an invigorating and exhausting day the consistent message was we now need to start complimenting traditional advice services with unparalleled data and artificial intelligence to deliver a superior customer experience. This has been a quick canter through my highlights of day one of In|Vest I will try and add more detail from my notes over the next week or so, so please revisit this page for an updated view. I will report on the second day of the event soon.
The first full morning of T3 2017 saw a cacophony of announcements worthy of the opening 30 minutes of Saving Private Ryan. The morning seemed to encompass an endless stream of outstanding product innovation and stunning research conclusions, making a clear case for a very different future for how financial advice is delivered. Many of these warrant extensive analysis in their own right but I'll try and keep this summary concise and readable and focus on the highlights. First up Riskalyse presented their new Premier product with a whole range of additional features including Client Dashboards, Retirement Plans, Account Opening and Data Sharing. If US advisors are anything like their British counterparts some may bulk at the $245 per advisor per month charge for a system that will still need to be complemented by several other external components, however, when one looks at the level of automation that Riskalyse Premier can offer it should be possible to recoup the monthly cost from the time-saving in managing just a couple of clients. To me this begs the question what should a realistic budget be for an advisor on a monthly basis to fully address their technology needs. Given the significant evidence presented in Joel Bruckenstein and Mark Bruno’s presentation the day before and various other sources, such as Fidelity, that eAdvisors achieve higher AUM, profitability and perhaps most importantly job satisfaction such additional expenditure should probably be considered money well spent. CEO Aaron Klein then proceeded to sets out his vision for the future of advice being driven by automated account platforms providing advisers with the opportunity to deliver high levels of automation and personalisation. The Riskalyse solution to this issue is their new automated account platform with one click fiduciary technology embedded within the process. This will be delivered as the next part of the next generation of their autopilot service. A series of partners will be available in an Autopilot store including Blackrock, SEI and Morningstar. The service will include powerful capability for advisors to white label third-party investment strategies and if they wish modify them to suit their own preferred recommendations. Clients’ portfolios can then be reviewed and automatically rebalanced in only a few minutes with a full audit trail. The new autopilot service will be available from May with pricing starting from 15 bps, but reducing to 10 bps for most advisors. Next up Advicent presented their latest enhancements to Naviplan including a new Plan Analysis Synopsis client report and a range of enhanced integrations including Quovo custodian feeds. Product manager George Fisher stressed the importance of using full financial aggregation to deliver a comprehensive customer experience. This was a recurring theme from many speakers and it appears that the American advice industry has recognised how powerful such services can be as a consumer engagement tool at a time when so many in the UK is still struggle with this concept. MoneyGuide Pro’s Kevin Krull opened his presentation by putting forward research which seriously challenges much of the conventional wisdom in the financial advice market. Having conducted biometric testing with real consumers the company identified that clients in the 50 to 70 year age group actually prefer virtual meetings with advisors over in person discussions. Full results from this research are to be published in the near future but earlier messages identified a range of reasons why consumers actually responded more positively to virtual advice sessions resulting in significantly larger levels of asset capture by advisors. This obviously supports the actions of the 83% of advisors who it had been identified the previous day now use video conferencing as part of their internal or client communications. Compelling case studies were also presented for the myMoneyGuide service where advisors can offer clients the opportunity to visit the myMoneyGuide lab, complete an online fact find and receive and interim financial planning report which they are encouraged to review with that advisor. One firm succeeded in guiding 123 into the lab process from a single newsletter in just four days creating new investment opportunities worth over $100 million. In a slightly longer campaign over 18 days another firm attracted 321 clients representing investment opportunities totalling $265 million with an average account size of $913,000. There will be many financial advisors who will be horrified by even the suggestion that rather than conduct their initial fact-finding in person with the client they should guide them towards an online service to supply their initial information, never mind an initial analysis being automatically generated, however the scope of such opportunities is clearly significant. In the UK context I can see significant regulatory challenges arising from the type of auto rebalancing advocated by the Riskalyse and MyMoneyGuide Pro approach to fact-finding and initial analysis. That said, it’s not hard to see how there are considerable consumer benefits to such an approach with enormous potential to drive down the cost of advice. When one also considers the scientific evidence that consumers prefer this approach perhaps it is time to revisit the status quo. Such services would appear ideal for being considered by the FCA’s advice unit where firms are invited to work with the regulator to test if new processes deliver significant consumer benefit and warrant regulatory change. Given the demand for advice services in the UK is now seen as exceeding supply there may be compelling arguments for considering regulatory change in the interests of consumers. eMoney Advisor began their presentation by highlighting that RIAs who have integrated technology within their businesses typically achieve a 20% higher income, spent 32% less time on operational processes and 29% more time on client management as well as serving 15% more clients overall. They also highlighted that younger Americans are far more likely to be willing to pay for advice with 79% of those between 30 and 39 being willing to do so compared with only 44% of over 50s. The company then went on to present not only an exceptional set of tools to improve customer acquisition processes as well as machine and data analytics capability to enable advisors to validate the quality of the data from a compliance perspective. eMoney Advisor really pushed the boundaries of demonstrating what could be achieved using leading edge technology including a prototype of Amazon Alexa to obtain information from a financial advisor. They also outlined their plans to add virtual reality tools to the next generation of their software. I subsequently had the opportunity to experience the prototype service which delivers a stunning experience. Imagine receiving financial advice on the holodeck of the Starship Enterprise and you won’t be too far away. This service really needs to be experienced to be understood. Since 2014 Fidelity have been conducting extensive research to identify differences between advisors who have embraced technology and other firms. SVP Product Management Tom McCarthy presented an updated view of this research based on a further round in 2016. Overall so-called e-advisors have 42% higher AUM, 34% higher AUAM per client and earn 23% more. 80% of the advisors believe their online strategy is more important than other firm initiatives. The company highlighted their extensive additional commitment to enhancing their own technology to support advisors and improve on-boarding experiences for their Wealthscape service. All of this is great from the perspective of American advisors but I can’t help feeling that Fidelity’s UK operation is seriously letting down UK IFAs by any sensible comparison. In the afternoon Dave Welling Co-General Manager of SS&C Advent highlighted changing consumer behaviour especially amongst wealthier clients which is driving them more towards digital advisors. Whilst more traditional firms are embracing robo advice this appears to still not be keeping up with wealthy consumer appetite for such services. He highlighted analysis identifying that investment clients are far more likely to leave advisors because of the lack of timely contact than the performance of investments. Welling also provided a very practical demonstration of the inefficiencies of face-to-face advice highlighting the extent of travel time necessary for an in-person meeting which can be entirely avoidable through screen sharing. Consistently through the day each of the above companies has demonstrated powerful technology to support advisors and liberate them to spend more time focusing on engaging with customers. It was impossible not to be impressed by the commitment of each firm to deliver to their clients the capability to transform financial advice processes, improve customer services and meet increasingly demanding compliance processes. Overall the day convinced me that with the right use of technology it is possible to enable traditional advice firms to support far more customers with the help and advice they need at far lower cost whilst at the same time increasing profits.