asset management

3 Asset Management Trends for 2017

Disruption may be the name of the game in the financial industry, but that does not mean everyone necessarily likes it. This year proved to be no exception with more sources of upheaval than ever applying pressure on asset managers.

I was recently invited to participate in a panel discussion at an SS&C event in Toronto called, “The View From Within.”  This event brought together thought leaders and successful advisors to discuss the outlook for the asset management industry as well as share some best practices for 2017.

How to Fight Fee Compressionasset management

The steady drumbeat of fee compression has become the new reality.  It has been driven by a combination of the regulatory push for more disclosures and the race-to-zero being pushed by robo-advisors. Asset management firms must develop new strategies to compete in this environment while still servicing existing clients, which is like trying to change the transmission in a Porsche 911 while it is going 150 mph (that’s 241.4 kmh for any Canadians out there).

My consulting firm, Ezra Group, works with broker-dealers and large RIAs on how to fight against fee compression.  There are three main areas that we work with our clients to improve:

  • Operational efficiency – The goal is to reduce the net cost per client, the cost to maintain existing clients as well as the costs to acquire each new client.  This is where technology can play an outsized role, especially by providing tighter integration between applications that are part of key workflows.  For example, SS&C’s acquisition of popular CRM solution, Salentica will allow the firm to develop a seamless workflow across multiple systems.
  • Process efficiency – This includes mapping of the firm’s critical processes in order to identify redundancies, overlapping responsibilities and manual steps that could be automated and/or improved.  It is important to avoid the mindset of “that’s the way we’ve always done things.” This leads to stagnation and inefficiency.
  • Vendor efficiency – When you treat vendors like business partners rather than, in everyone’s best interest to grow your business, so make every interaction you have focus on this.

(See How Advisors Can Use Technology and Service to Fight Fee Compression)

CRM2: Putting Investors First – Or Scaring Them Away?

The original purpose of Canada’s CRM2 regulation was to create greater transparency around advisor fees and performance reporting. The regulation is similar to the Department of Labor (DOL) fiduciary standard that American-based advisors are wrangling with as we speak. Putting investor interests first might seem like an obvious and simple choice. The implementation of the idea is where things can get complicated.

As the panelists have shared, a common reaction from clients upon discovering the newly reported advisor fees is one of shock. That reaction may have little to do with the actual fee amount being too high, although advisors who are charging higher-than-average fees may find themselves having to justify their fees or cut them down to a reasonably competitive level. However if the fees are already reasonable, the best approach may be to shift focus to value provided by the advisor. Some may find that using the fee disclosure as a conversation opener has the effect of creating better relationships with clients. Fee compression may be a new normal, but that does not mean you must lower yours to compete effectively.

CRM2 regulation also underscores the importance of using the right technology to support your practice. With the new requirements around performance and fee disclosure, advisors must ensure that their internal systems are able to generate the necessary reports. Advice from industry experts is to make sure outside vendor systems are CRM2-compliance instead of just assuming that they are.

Robo Technology Isn’t Just for Millennials Any Moreasset management

Low fees were one of the major drivers behind the rise the robos. In the industry where fees have been notoriously opaque, many automated investment platforms touted their low cost as a key selling point, displaying it prominently across websites and mobile apps. The low-cost strategy may have attracted early adopters, but it probably won’t be the most important contribution the robos made to the field.

When it comes to robo platforms, the hype wave may be over.  However, the hidden benefits of the robo disruption are quietly shaping the way traditional advisor firms look at their technology solutions and client experience.  One important aspect of the robo experience, fully automated account opening, has spread through the industry like wildfire.

My firm recently completed an RFP process for a robo-platform solution for a large IBD that included a very slick, completely electronic onboarding process.  While it was not part of the original requirements, we asked the vendor to include pricing to provide the same account opening experience for traditional clients. Otherwise, there would be two different client experiences, with the majority of clients suffering through a time-consuming and heavily manual process.

Another trend is a change in information sharing philosophy. Today, data is pushed (not pulled) to the client, observed Mark Elliott, Director of Performance and Attribution Solutions at SS&C. This on-demand, 24/7, highly customizable approach means a drive for better client portals, eSignatures, and reporting on the go.

Some robos are using non-traditional business models to build massive user bases.  Acorns, an app that automates and rewards savings, has shown that Millennials want help learning how to save rather than retirement advice.  Consider that Betterment, a low-cost automated investment platform, has just over 100,000 accounts while Acorns boasts more than 1 million! Ultimately, advisors must remember that client needs drive choices and behavior.  (See Why Acorns is the Only Roboadvisor That Could Be Worth $1 Billion)

Asset Management Tools for the New Year

The new generation of clients may look and sound quite different from their parents and grandparents, but at the end of the day most still want to talk to someone about important investment decisions. For advisors, that spells a need to engage prospects and clients in a continuous conversation through client portals, social media, and thought leadership. As Eric Rocks, the panel moderator, put it, we have lots of technologies on the table. Today’s challenge is choosing the right technology components and piecing them together to support and augment the traditional service offering.

Success means going beyond offering low-cost ETFs, although they may well be a part of your strategy for certain clients. 2017 will push advisors to re-consider their technology offerings with a new appreciation for the power they have to shape the client experience. From streamlining operational efficiency to improving reporting, your technology platform should serve as an organic extension of your value proposition. Great technology platforms can help your firm withstand the fee pressure and create deeper customer loyalty – which ensures your continued success in this ever-changing environment.



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