invest 2015 conference

Too Digital to Fail: InVest 2015 Conference – Day 2 Summary

While the first day of the In|Vest 2015 Conference was devoted to startups and their potential to disrupt the traditional financial services landscape, day two turned the tables and gave the too-big-to-fail banks and other large wealth management firms a chance to show off their digital mojo and explain why they won’t be the ones to become disrupted.

After you finish here, check out my summary from the first day of the conference.

Digital Transformation Of The Wealth Management Experience

  • Kim Dellarocca, Managing Director, Pershing, a BNY Mellon Company
  • Ram Nagappan, Chief Information Officer, Pershing, a BNY Mellon Company

I think this is good advice.  I expect a lot of smaller advisors, the ones who primarily offer investment management services that consist of a basket of ETF’s that are rebalanced annually, to be out of business in 2-4 years. Investors will migrate to lower cost robo-advisors or hybrid services.  Pershing has been making a lot of announcement about their plans to offer digital wealth management services to advisors.  (See Pershing Plans a Robo-Advisor White Label Product)

Ric Edelman has an even gloomier outlook on the impact of robos on traditional advisors.  During a debate with Adam Nash, CEO of Wealthfront he said, “most advisors have as their value proposition price and performance. If that’s your value proposition, you will get crushed by this guy.”


Disruption And Emotion In Digital World

  • Devon McConnell, Managing Director, Head of Digital, Wells Fargo Advisors, LLC

Wirehouses like Wells Fargo will be the ones who are squeezed the most by these countervailing forces.

Wishful thinking.  They said the same thing about independent booksellers and the stereo salesmen at Best Buy.

This didn’t seem like all that big of a revelation to me.  But it was tweeted and retweeted a lot, so it must have resonated with the audience.

The Intersection Of Brokerage And Commerce

Back in the day, when my friends and I were having our first children, I liked to give them shares of stock as a gift. The process was a major pain in the ass!   First I had to buy the stock in my DLJ Direct account (another blast from the past), then I needed the newborn’s social security number to be able to transfer the shares into their name.  Then I faxed a letter to the broker to perform the share transfer and mail the physical stock certificate to me, so I could frame it (yes, I did that) and finally give it to my friend.

Well, Dan Schatt came up with an easier way to do this.

Stockpile is a startup that wants to enable consumers to directly purchase individual equities in dollar amounts without a brokerage account.  They envision people buying gift cards for $50 of AAPL or using credit card points to invest in some GOOG.

This is a brilliant way to capitalize on consumers love of gift cards and make direct investing in equities easier.  In the US alone, $124 billion was loaded onto pre-paid cards.  A large percentage of these purchases are being made online and via mobile, so Stockpile is well-positioned to jump onto this bandwagon.

Stockpile is still in their beta-hype-pre-launch-drive-demand-with-scarcity phase of their business model, so you have to put your name on a waiting list to get access.  But you’ll have to wait in line behind me.

I didn’t know that.  But it makes sense since most people just own mutual funds or ETF’s.  Now, I’m wonder if the Stockpile gift cards be traded?

What does this mean for robo-advisors who target self-directed investors?

Here’s an interesting statistic from Financial Advisor IQ:

According to a recent report by Cerulli Associates, nearly 30% of high-net-worth investors — defined as those with $5 million or more to invest — think of themselves as managing their own money.

Great use of a noun as a verb.  More financial services products should be consumerized.  (now I have to add this word to my MacBook dictionary to get rid of the red, squiggly lines)

Enterprise Technology Panel

More of the big boys talking about their digital plans and doing a little robo-bashing while they’re at it.

Moderator: Alois Pirker, Research Director, Aite Group


  • Riley Etheridge, Jr., Managing Director, Merrill Lynch
  • Doug Fritz, Chief Technology Officer, First Republic Private Wealth Management
  • Indy Reddy, Head of Global Operations & Technology, Citi Private Bank, Citi Wealth Management

Everyone will be an advisor soon.  Even the robos are all RIA’s.

Vanguard and Personal Capital are already doing this.  Apparently, a lot of HNW investors are satisfied with the current level of digital touch being offered.

This was a head-scratcher comment.  I guess Reddy isn’t on Twitter because he never responded.  Probably because he’s a Baby Boomer.

Any takers?  I imagine that the big robos are racking up frequent flier miles visiting every IBD in the country who is kicking their tires on a partnership deal. Betterment looks like the winner here, scoring the Fidelity brand name to attach to their wagon.

Serving The HNW Client Base Today And Tomorrow

  • Harsh Kumar, Global Chief Operating Officer, Citi Private Bank
  • David Satler, Chief Operating Officer, Barclays Wealth and Investment Management
  • Phil Sieg, Head of Ultra High Net Worth Client Segment & Strategy, Merrill Lynch
  • Gauthier Vincent, US Wealth Management Practice Lead, Deloitte Consulting

So they are prime robo prospects! But one study of HNW says that 85% of them don’t know much about robos, according to InvestmentNews:

On a scale of 1 to 100 (1 being low and 100 being high), wealthy investors rated their knowledge of robo-advisers at 15.47, according to a new Spectrem study. Meanwhile, only 6% said they have ever used a robo-advisor.

BusinessInsider reported that among millionaires, robo-advisors are most popular outside the US and Europe, according to the annual Capgemini and RBC Wealth Management World Wealth Report.

invest 2015 conference

I’d wager that the last third of advisors will be retiring soon…

This was an interesting comment.  Should advisors leverage their network to offer a social media-like experience to their clients and allow them to connect with each other?  The answer from the panel was no, mainly due to compliance issues. But there’s nothing stopping them from doing it on their own. Is anyone setting up a Facebook page for Merrill Lynch clients to post comments about their advisor?

See my post Orchestrating Advice through Goals-Based Wealth Management.

Who Will Win the Robo Game?

  • Steffen Binder, Research Director and Co-founder, MyPrivateBanking Research

Binder’s projection is 40% lower than what the A.T. Kearney guys think.  An $800 billion difference is not insignificant!  But a $1 trillion is still a lot of money.  And Barry Ritholz thinks Vanguard will have 10% of that market share!

Does this include established firms that partner with robos?

You need to differentiate yourself in a crowded market.  My belief is that all the cloud-based RIA’s (see how I didn’t use the term robos?) will have to expand their services to include most of these additional offerings:

  • Account Aggregation
  • Financial Planning
  • Tax Optimization
  • Integration with CRM

I would file this prediction (facetiously) under “Going Out On A Limb”.

I sometimes walk my strategy clients through a hypothetical situation where Google enters the wealth management space as a TAMP and offers everything for free.  How would they respond?  Could they match the price and make money in other ways besides the traditional AUM fee?

This is the first time I heard the term “GAFAA”.  Hopefully, I’m not the only one.

Democratizing Investing: Bringing High-Powered Products And Services To The Masses

Moderator: Tanay Jaipuria, Business Analyst, McKinsey & Company


Day Two was not only the day of the 800-pound wealth management gorillas, but also the 800-pound consulting firms.  Deloitte, Bain, A.T. Kearney and now McKinsey all paid to get someone on stage at this conference.

No, but they can mitigate it by enforcing investing and wealth management best practices.

Kane didn’t elaborate on this.  I’d like to know the average percentage of female investors at robos.  I don’t what it is about his company’s service that attracts more women.  I couldn’t find any statistics on this in my usual five minute Google search.

I posed a question to Kane about the hedging that his firm does to reduce clients’ downside risk.  His response was that they don’t actually hedge anything!  They are more like a tactical manager and de-risk asset classes or sectors that they believe are overbought.  (See Should RIAs Use Tactical ETF Managers?)

Where Wearables Intersect With Wealth

Moderator: Penny Crosman, Editor in Chief, Bank Technology News


  • Liensa Rouse, Sr. Manager, Mobile Product Management, E*TRADE
  • Andres Wolberg-Stok , Global Consumer Banking’s Global Head of Emerging Platforms and Services, Citi

BusinessInsider projects 148 million units of wearable technology to be shipped globally in 2019 versus 33 million this year.  I think the 1/3 of investors estimate is in the ballpark.

I don’t know what the term “financially intimate” means exactly.  Would the percentage change of the S&P500 versus the prior days close not qualify?  I might want to know that sometimes as opposed to just my own portfolio performance.

The Last Word: Sigfig And Bank Of The West

Moderator: Lee Conrad, Editor-in-Chief, Bank Investment Consultant


I’m of two minds on the In|Vest decision to go with two member panels.  1) I think three people is the optimal number to have the best discussion and exchange of ideas; four is too large and doesn’t give everyone an equal opportunity to speak, but two is too few and doesn’t provide enough variety, in my humble opinion.  2) Maybe two panelists were ok considering the that sessions were shorter than other conferences.  Too short for my liking.  It hardly seemed as though we got settled into our seats before the moderator was wrapping things up!

Many people feel that networking is the main reason to go to a conference and the sessions are secondary.  But I feel that they should at least be given equal weight.  To that end, the sessions should be at least 45 minutes to provide enough time to go in depth on the topic.

But will we still be using the term ‘robo-advisor” in five years?  Will anyone care about differentiating robo-advised assets from hybrid from fully human-managed?

Is anyone surprised that John Bahnken works for a bank? (sorry, I couldn’t resist that one!)

I’ve seen reports that China is now #2 behind the US in the number of millionaires after they created over a million new ones in 2014 alone.

Sha proposed that banks take the opt-out approach to investing.  Just open an investment account for every customer, unless they request to opt-out.  Most may never use it, but the number that do will be much, much higher than the current system.

InVest 2015 Conference

Now that you’ve finished here, check out my summary from the first day of the conference.

Related WM Today Content
Pershing Plans a Robo-Advisor White Label Product
How Risk Tolerance Software Is Disrupting Wealth Management
Can Client-Directed UMA’s Help Defend Against Robo-Advisors?



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at