#ItzOnWealthTech Ep. 51: The Future of Enterprise Wealthtech Webinar

What do you get when you bring together five leaders from the largest wealth management technology vendors in the industry?  You get a webinar that is jam-packed with valuable information, thoughtful analysis and predictions for the future of enterprise wealthtech.

Now hit the Play button!

This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

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Complete Webinar Transcript

Craig: Welcome to this webinar, this is the future of enterprise wealthtech and my name is Craig Iskowitz, I’m the CEO of Ezra Group Consulting. We help wealth management firms make better technology decisions and I’m very happy to introduce our guests speakers for this podcast. I’m going to quickly run through them and then we’re gonna jump right in. We’re not going to do any long intros.

Craig: Our first guest is Stuart DePina, President of Envestnet. We have Cheryl Nash, CEO of Tegra118, John Lunny, CEO of Vestmark, Randy Bullard, Global Head of Wealth, Charles River Development and Eric Clarke, CEO of Orion Advisor Tech. So the format for today, we are going to be going through a bunch of questions that we’ve prearranged. We’ll have some Q&A. So feel free to use the Q&A button in Zoom and post some questions and we’ll try to save some time at the end for your questions. This is being recorded, so if you have to drop off, it will be posted later so you can catch up.

Helping Clients During the COVID Crisis

Craig: So the first question, we’re going to start with Cheryl. Can you talk to us a little bit about some ways your firm is helping clients during this crisis?wealthtech companies

Cheryl: Thanks Craig. First I want to start off by saying I hope everybody joining today is keeping safe and healthy. So this pandemic has obviously impacted all of us in a very profound way. At Tegra118, we’ve been steadily using digital channels to communicate with our clients just like this. What we’re doing here with Zoom, we’ve done virtual road shows with our clients, so we’ve introduced them to our new company, which is Tegra118 from Fiserv Investment Services. Our clients are really looking for peace of mind from their wealthtech solutions provider right now as everybody on this call knows, many have shared, and are really working with a system that they feel is reliable and scalable. And we’ve seen market volatility at record levels throughout this crisis. We are doing a few things in particular. One is to mobilize a task force that is receiving inquiries, requests for assistance and it’s those things that they need quickly, especially when the market was really volatile it was used mostly at that time, the questions really slowed down. We’ve created a support group for advisors, so advisors that are looking for ways to navigate our system, more advisors are using it that they have before. So we put a support group in place to help with the high volume of calls. We provided operations support during the crisis, especially when there was market volatility, when there were huge trade volumes, to help with some staff resource shortages. Some of our clients had issues with India, when the country shut down, they lost some of the resources we stepped in and helped with that. And then early on we put in a robust business continuity plan. We’re all working from home, we’re making it work. We were just talking, the panelists before this, and this might be something that really makes us look at our real estate strategy. But our clients have relied on us, and we’re making sure that first and foremost, our associates are healthy, our teammates are healthy and we’re adhering to the health precautions that we’re getting. A lot of things we did proactively, in the middle of this crisis as I’m sure everybody else can probably attest to.

Craig: So John, so tell us a bit about what Vestmark has done.

John: A lot of the same things Cheryl mentioned. I mean, Vestmark’s an advisory platform. So first and foremost, the trade volumes are through the roof. Spikes even close to 50x the normal daily volumes, which is just incredible. So it means the files are just massive, and everything’s late. With Vestmark as the advisory platform and our clients as the advisory firm and the custodian, we have to manage the communication well, stay up late making sure everyone’s communicating on where things are. That’s been the biggest thing I can say that to helped push the data through all the different pipes, but Vestmark also has an outsourcing group too, and it’s part of our business as some firms use Vestmark to do some of their operations. But that group has been a really good asset for us in this time because we’ve been able to help some clients that don’t use the outsourcing group, with their operations. As Cheryl mentioned, when India shut down that really did hit a couple clients really hard. They’re bringing in all personnel, their teenage kids and we’re hoping to train them, but we’re also helping them with the volumes that they’ve been hearing too.

Craig: Thanks John. So Stuart, what has Envestnet done during this time to help clients?

Stuart: A lot of similar things. We’ve seen a tremendous spike as a result of a lot of the volatility that’s going on by our clients and the service that they need. I think the main thing is being available and responsive. I mean, at the end of the day we’ve got a lot of clients with similar stories who honestly weren’t ready for it. They didn’t have their own business continuity plan. These are even enterprises, institutions or maybe the ones that they had, they just didn’t stand up. So we’ve been able to lead in a lot of cases. Our staff has really stepped up, particularly in the latter part of March, there’s been a tremendous amount of extra work people had to put in. We were able to go virtual relatively quickly, so that was a big thing. We’ve been able to also leverage some of our capabilities. We’ve distributed a lot of our tools to our clients to use in support of some of the ways that they manage their clients. So that’s another way that we’ve tried to lean in and help some of the firms who have given away some of those particular tools without cost for a period of time. And I know other vendors, other people on this webinar have done the same things. So I think that for the most part, just being available, being responsive, trying to help them in their time of need, which we recognize is beneficial to all of us.

How has Platform Usage Changed?

Craig: Thanks Stuart. I’m going to flip the script a bit here because John, you covered the next question. So Eric, what are some of the changes you’re seeing in the usage of your platform, of Orion since the crisis hit?

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Eric: We’re seeing obviously a lot of the same volume increases that the others have mentioned, but the one area where we’re seeing advisors really have an uptick with regard to adoption is in our direct indexing tool that allows advisors, instead of purchasing ETFs for their clients, to purchase the underlying security constituents. And what that does is it allows advisors to take advantage of market volatility and do some tax loss harvesting for the portfolios. And we’ve seen that increase five fold as we’ve gone through this crisis, Craig. And it’s been a neat thing to see the custodians dropped the ticket charges to zero which really removed that friction point from the industry, and then on top of that, you combine that with technologies like the direct indexing technologies. It really allows advisors to come in and add a lot of tax alpha value to the client portfolios. Market volatility, especially on the downside, is never a good thing. But it certainly creates an opportunity here for our advisors to take advantage of what the custodians are doing and combine that with some technology that’s now available to them to implement and execute with their client accounts.

Craig: Thank you, Eric. So Randy, how about you? What have you guys seen usage of your platform wise?

Randy: In addition to just the spikes in volume that everyone else has talked about, which were extraordinary and for them to be happening at the exact same time that the entire industry is pivoting to having all of those people that are doing all those trades remotely, to have that double whammy was interesting to say the least. A couple of specific things we’ve seen a spike in utilization of our mobile apps, not surprisingly. And then, a lot of FAs needing to access our tools from home, whereas historically they’d exclusively, many of them use those tools from their office, so a lot of network access issues and things. They were our customers that needed to work through some of those transition items. But there was a lot of activity. We worked actively with our partners to make sure that all the technology they rely on was fully accessible by all of their support staff, their financial advisors, and everybody else in the home office that needs access to that technology from their homes.

Disaster Recovery Testing

Craig: Cheryl, I wanted to do a follow up on something you’d written me offline. You had mentioned you’ve done a tabletop pandemic test that thought was really interesting. Can you explain how that works?

Cheryl: So we do this on an annual basis and it encompasses a few different things. We look at business impact analysis across the platform, as everybody’s talking about volumes. We saw, tremendous volumes as well, five times, the normal volumes that we saw pre-COVID. But we do a business impact analysis, we do emergency response. We make sure we’ve got everybody’s phone numbers, all their information so that we can text if there’s an emergency, and make sure there’s a call tree in place. We do recovery planning, we actually put together the worst case scenarios that we could think of that could come out of this crisis. Let’s say three people on the leadership team get sick. Let’s say, five of your service people who service your largest accounts get sick. We went through all that planning and looked at the administration of our healthcare plans, made sure that we had changed some things that needed to be changed. If people were out longer than a period of, say, 5 or 10 days because of COVID, we let them ride back to their healthcare plan. We actually leverage Fiserv – Fiserv still owns 40% of us and they’ve got great applications for this. So, we looked at what would happen if we lost 50% of our staff because of the illness, all those types of things that you would doin a pandemic type way and through a crisis.

Future of the Managed Accounts Industry

Craig: I want to go back to Stuart for the next question. So with this crisis and the economic crisis and all the other area issues, how is it impacting the managed industry and how do you think it’s going to be changed longterm by the crisis?

Stuart: I think what we’re going to see, and we started to see this of course the last couple of years, which is where does planning go from here and how does it impact the managed accounts business? Clearly nobody planned for this or at least, nobody saw this one coming. So it’s one of the things that really impacted individuals and that’s going to have an impact on the industry. I think another element, which is somewhat adjacent to planning, is I think you’re going to see a lot of leveraging of predictive analytics and how it’s going to impact the managed accounts industry in terms of selection, building products, building outcomes. Predictive analytics through artificial intelligence is going to be a meaningful influence on the managed accounts industry. I don’t remember which one of my colleagues mentioned it earlier, but leveraging digital is going to be something that we’re all going to see a greater adoption of and that’s going to influence the market as well. And I think the last part probably that we’re all experiencing at some level today is enterprises are going to need to continue to think through what “scalable” really means. We’ve met different levels of scales and we’ve experienced how to navigate through different levels of scale over the course of the last eight weeks, and hopefully the worst of it’s behind us, but nonetheless, we’ve hit some new highs, and it’s important for us to recognize that while we as service providers have had to think about that, our clients themselves are gonna need to rethink that as well. So from a managed accounts perspective, what does “scale” mean and how do you manage, if you will, mass relationships. And so that whole relationship between the digital and the human component of how an advisor or the advisory industry supports their own investors. There is certainly a bright light on that, and there is certainly going to be some learning that the industry takes from us in my view.

Craig: Eric, what are your thoughts on the future of the managed accounts industry after post COVID-19?

Eric: I think the managed accounts industry has to get beyond the managed accounts. Like Stuart had said, it’s got to start blending and combining planning with the managed accounts. But it’s also incredibly helpful for advisors as we go through crises like this, to be able to leverage the communication capabilities, the client and marketing tools that the managed account platforms provide to connect with their clients. And a lot of advisors right now as we go through this crisis are dealing with, their kids are at home, they’re working from home, their staff is working from home. They are struggling just like the rest of us and at the same time, they have to try and figure out how to be empathetic with their clients about the struggles that they’re experiencing. And advisors are really carrying a double load of burdens right now, not only their own, but also their clients’. And so by outsourcing to a managed account platform, it will not only help alleviate some of the burdens that they’re experiencing, but it will also give them additional collateral that they can leverage with their client communications, which is especially critical as we go through times like this.

Craig: John, what are your thoughts on where we’re going to be after this crisis?

John: I agree with Eric. Advisors need to be advisors and that’s a big job by itself. Outsourcing professional advice is always a good thing. I think the rough trade programs will always be there, but I think a crisis like this kind of illustrates the need for, the outside managers to really do their job and do it well. So there’s a lot going on. There’s an incredible amount of model updates coming from the managers that the load is unbelievable from the managers changing their models every day. But again, they’re focused on it. They’re doing it as best they can. And then, the advisors are actually changing strategies for their clients, which is also kind of an interesting move for them to make, but they’re switching from one type of investment vehicle to another. And that kind of makes the perfect storm for all this training that we’re talking about. But, again, it’s another, I think it’s another good indication for managed accounts. I think the separate account is the purest investment vehicle that’s out there today. I’m probably preaching to the choir in this group here, but the mutual funds have fees, the ETFs have volatility issues, you have your own tax slots. It’s really a pure investment vehicle, and I think people will begin to see the performance of that through this crisis and again, it’ll just be another tailwind for the industry.

Which Programs Will Grow?

Craig: Indeed. So let me go back to Eric. With the crisis and with the changes we’re seeing, what types of programs do you think are likely to see increased growth in market share as people adjust to the post-crisis world?

Eric: Well, I think our innovation cycles have been reduced. It used to be that when you would roll something out on a mobile application or through the web, that it would take a period of time for those technologies to be adopted. Now within a matter of six weeks, we’ve all had to become Zoom experts. We’ve all had to become experts in connecting digitally and using digital tools, and I think that you’ll see these innovation cycles for technology companies reduced. Our time to market is now, and the speed to market is yesterday. And as a result of that, the innovation pace is only going to quicken here as we move forward.

Craig: Randy, how are things going at Charles River in terms of your views of products and programs being changed?

Randy: I would echo Eric in that I don’t think the what has changed very much. I think COVID-19 doesn’t substantively impact the focus of most of our customers. It really is an acceleration of the pace, whatever we’re working on, you just need to work on it faster and get it to market quicker. I think what Eric was talking about earlier around direct indexing, there’s a lot of things going on in the market that are going to move a lot of advisors and customers in that direction. There’s a lot of money in motion, a lot of clients’ self-directed money that is looking for advice moving into advice solutions. And your money in motion during COVID-19, you’re going to shop digital, you’re not going to be driving around, you’re not going to be taking in branch meetings, you’re not going to be picking up the phone and making a lot of phone calls. So having a good way to digitally onboard and acquire a new customer is super critical. Digital initiatives, digital based platforms and the interactive hybrid, kind of FA digital programs, like what UBS did with their advice advantage program or Merrill did with their edge program. Those types of solutions. I think a lot of firms for whom it was already a priority to build and launch all of those types of programs, now it went from important to urgent or even critical.

UMAs Will Be The Winner

Craig: Cheryl, Tegra118, one of the first leaders in the UMA space, first developers of the UMA technology and platform. Have you seen a growth in market share in that do you see that as being a benefit, a winner in the post-COVID world?

Cheryl: Yeah, I do think so, Craig, that UMAs, will be the winner. We have seen increased growth. We’ve seen increased market share. We’re helping our clients get to the end state, which ultimately is the UMA, and we’ve been talking about UMH for so long, but ultimately the UMA is right now the end state for our clients. There’s different types of different factors that UMA that we’re working with, but I do think that when you look at where we are right now and a real superior portfolio, that really centralizes and uses best of breed managers and lets the investor have risk exposures within the account. UMA is really the answer for that. We’re seeing a lot of growth there, I’m sure the rest of you on this call are as well. We’re seeing growth across all of our product sets, but the biggest growth component because it’s newer and some of the firms are really just starting to roll out UMA, that’s really becoming one of the bigger growth areas for us. And it’s really because it allows you to have sophisticated architecture and platform consolidation and all those things that I think are crucial right now from a cost efficiency standpoint.

What’s The Deal With Robo-Advisors?

Craig: That’s excellent. I want to move on to the next question, which is we’ve seen large asset inflow is going to robo-advisors, digital advice platforms in the past few months, which is sort of the opposite of what a lot of the pundits said was going to happen in a crisis. I’m going to Randy, do you see this trend continuing over the next 6-12 months or is it just a blip?

Randy: Very much so. I think firms that have made good investments in building out their digital wealth platforms, robo advice programs, hybrid, whatever nomenclature you want to use, I think are very well positioned, particularly if they’ve got a big brand behind them. Whether that’s an established brand like a Vanguard or a Schwab or a newer brand like a Wealthfront or a Betterment, all those firms are positioned to do well and it’s going to increase what was already considerable pressure on every firm to really up their game in their digital platform. I don’t think it is necessarily going to provide new opportunity for early stage robos, and there are a lot of them out there. There are a lot of firms that have launched offerings. It’s going to be a tough time for a new infant brand. I think it’s going to largely be the firms that have got digital programs or good brands that they can put behind a new digital program that will end up being winners in this post-COVID.

Craig: Okay. So over to Cheryl on the robo-advisors. With all the assets go flowing in, do you think they’re going to be able to scale? And we’ve already seen some problems with some of these digital platforms not doing so well under a load, which frankly the firms on this webinar aren here because you have been able to support huge scale with some of the largest firms in the country. What are you seeing with these asset inflows and do you think it will continue?

Cheryl: I think it’ll continue. I think digital just becomes table stakes. When you think about what robo’s done, at least for our business today, it’s enabled us to focus on the experience, the investor experience, the client experience. And I do think that we’ll see that continue. Around scalability, as all of us have said on this call today, we’ve seen increased trade volumes and increased data coming through and custody data and all that flowing through our platform, robo-advisors in many cases, and we’re talking to some today, are looking to partner with firms like ours where we can actually leverage our portfolio counting or the platform that we’ve built as the utility. And the robo platform does what it does really well, which is more that investor portal, that investor experience. But I really see the robo digital, I don’t think they even like to be called robos anymore, I think they’d rather be called digital advice platforms. But I do see those really continuing to grow. I think we’ve all learned a lot from them and I think they’re what investors are looking for up to a certain point when they get more complicated and they need real advice.

John: In general, every individual really just wants to be more self service. I mean we all do in every aspect of our lives, including making tee times at the golf course. But I think that the more self service you can do online versus calling somebody and trying to make an appointment, it’s definitely a big part of it. And for Vestmark too, it’s more like the engine behind the experience. So for us it’s about providing APIs and widgets that firms can use for leverage, to customize and build their own personal experience or their own brand experience.

Cheryl: That’s exactly right. I can’t wait to get self service for a haircut appointment.

Craig: Half of us need it and half of us don’t.

Cheryl: That’s true!

Encouraging Innovation

Craig: So we’re about halfway through the webinar. We’re getting a lot of questions, thank you for everyone who is posting questions. We’re going to try to get to a couple of them at about 1:45, we’ll switch over to Q&A. Please keep sending them in and if we can’t answer them all now, we’ll post them afterwards to the participants. So we’re talking about digital advice, let’s stay on the innovation track. Let’s talk about how innovation is going to be spurred by this crisis as most crisis often do spur innovation. And as we know from the 2008 crisis, a lot of brand name firms started in 2008. How has your company, being some of the largest firms in the industry, how are you guys encouraging innovation inside your platform? Let’s go to Stuart.

Stuart: Well you talked about 2008, I’ll actually go back to the internet bubble 2001, 2000. That’s when Envestnet was founded, that’s when Tamarac was founded that’s when Yodlee was founded. So these disruptions create a few of these opportunities for people to go out and start businesses and I’m sure that there’s going to be a lot of that that comes out of this particular crisis. In our organization, we actually have an innovations lab where we try to create an environment where we take some of our best thinking individuals and we try to spin them off so that they don’t have to be really focused on a day job, they go off and be creative. So investments are made in that regard. But as the whole market goes, we’ve also been pretty acquisitive over the course of our tenure. And we’ve acquired many different businesses where we’ve identified that there might be, different organizations that have taken a different approach to how they want to solve for problems that are part of the ecosystem that we traffic in and we’ve acquired in that way. So we do a little bit of both. We’re fortunate to have been in a position to be able to create, if you will, the opportunity for it to happen organically, as well as be acquisitive and try to find similar opportunities. When we have our innovations labs, we try to create these environments where people can go off and spend several weeks to months working on ideas. And I think the last thing I’d say is, and I’m sure everyone on this call has probably says the same thing, as we listen to our clients. I mean really sitting down, listen to our clients, what are their needs? What do they see? And that helps us think about where we want to invest.

Craig: Let’s go to John. So how is Vestmark spurring innovation inside your company?

John: Vestmark, we’ve been around for almost 20 years. We’ve always grown mostly organically through our clients. We haven’t taken a lot of outside venture money, and so as an enterprise provider, we really work with these clients, they really view Vestmark as a strategic decision. So we get involved with their strategy, both what they are building, what they do need. And that’s spanned through the course of our history here, but it starts with starting early on with things like fixed income modeling, characteristic based modeling to fulfill that part of the product. Our innovation in the UMA and being able to seamlessly transition between the mutual fund wrap account to an estimate to a UMA all in one account, is also another big innovation for us. The lock options trading capability we launched last year. Again, just trying to provide these sophisticated instruments, investment vehicles. Enabling them to be more efficient so that our firm, our clients can bring it down market. And you know, we’ve seen that trend where 15 years ago you probably needed a million dollars to be in a UMA. As you bring it down market, it’s through efficiencies that we provide, and other firms on the panel as well. Getting to a smaller and smaller account, with direct indexing or personal indexing, whatever that is, enabling those types of products. It’s just a continuum of enabling, what our firms really are trying to deliver, which is better advice, better protected advice, better compliant advice and all the ways that they’re trying to differentiate themselves if we’re trying enable them to achieve all of their goals.

Craig: I want to go to Eric over at Orion. How are you guys spurring innovation? You guys did a great job bringing out new products and services at a pretty fast pace. What’s your innovation secret?

Eric: Our application development teams look at five different areas when it comes to innovation. First we look outside of financial services. While we like to think that we’re pretty innovative, actually we’re probably not as an industry. So we look at what you know, best in class experiences are from a tech perspective outside of financial services, and try and bring those back into our own business and help our advisors apply those. Companies like Netflix, Amazon, Apple, these are truly innovative companies. They do things incredibly well. They execute well. They have user experiences that are natively familiar to our users and our advisors, investors. And so we try to bring those ideas back. That’s the first thing that we do. The second thing that we do is we look at feedback from our advisors. While we might think that we have great ideas here at Orion, our advisors’ ideas carry more weight. They’re in the trenches, they are using our technology day to day, so we’d like to look at their feedback. Third, we look at the great competitors that we have, many of which are on this webinar with me today. We really admire a lot of the things that our competitors are doing well. So we try and make sure that, that we’re up to par in the different areas that they’re doing well. The fourth thing that we look at is data. We like to drive a lot of the decisions that we make based on data. And then lastly we look at our own ideas. Things that we think would help improve our advisors experience. But those are the five things that our application development teams look at and in a priority order that we look at them.

Who Will Survive?

Craig: Thanks, Eric. Moving on to something we’re calling the impact of the crisis, the who are going to be the survivors of this crisis? And if you’ve ever seen Michael Kitces, his advisor tech map, there’s a lot of firms in our industry, a lot of VC backed firms, and this downturn economic downturn can have an impact. Some have said that up to 20% of the firms on that list could fail or get acquired due the crisis. So John, what are your thoughts on that?

John: Yeah, there’s a lot there. First of all, there’s a lot of cash with the private equity and venture capital firms, there’s tons and tons of cash. But they’re also trying to assess, to pick the winners and they’re actually reallocating some of that cash around. So a lot of firms are running with cash needs, right? And so it’s kind of scary for some firms I imagine, that need the cash and your venture capital firm or your PE firm is thinking, well are they going to make it or not? And maybe I should put my bets over there instead. It’s really an interesting time for a lot of these firms. Now for us, Vestmark is a privately held firm. So, it’s a good time for firms who want to buy firms, and it’s a bad time to sell a firm. But Vestmark has no intention of selling. I mean we’ve been at it for a very long time.

Craig: Are you making an announcement now, or?

John: Oh no, no, I’m not making an announcement, I’m just saying we want to stick around for as long as we can privately. But but I’m getting all these calls, I’m getting calls from every firm on the planet, more than usual. Cause it’s a good time to buy. And I think if you’ve got a good strategy out there, a good acquisition strategy, and a partner with some deep pockets, then it’s a great time. I think there’s going to be a lot of good deals in the market here in the next 6-9 months. The valuations will lag a little bit from the market I think, even though the market’s mostly rebounded, I don’t know if that’s a thing, but I think the valuations will still be impacted, people are still going to want to put pressure on the firms that need the capital and and probably pick up some good deals, even more than usual. There’s already a lot of M&A already, but there’s going to be more than usual.

Craig: Bargain hunting.

John: I think so.

Craig: What do you think, Stuart? Do you see the crisis impacting a lot of the smaller firms? And how do things shake out afterwards?

Stuart: I do, I think it will. In our annuities business, we support a lot of FinTech companies, so we have a bit of visibility into that segment of the market. So I definitely think that it’s going to impact it. I think it’s going to be more than 20% that go by the wayside, honestly. But at the end of the day, I think if you’ve got a good strategy, if you’ve got resilience, if you’ve got a few good clients, you’re probably going to see some firms really make a difference. I know that when we were running Tamarac and 2008 hit, that was a hard time for us. But the reality is I think we’ve found our niche and we’re committed to what we’re doing. So I know that there are other firms like that out there, there’s no question about that, that are real estate VC funded or even bootstrapping it, who will make it, but I do think that there’s going to be a fair amount of firms that fall by the wayside. Let’s face it, when I first came into the Tamarac organization in 2006 and Bruckenstein put out a survey which indicated that both at the enterprise level and RIA firms, were spending less than 3% of the budget on technology. That just shows that that’s a demonstration of little was invested in technology back then. Today that number is closer to the high single digits, which is still not a tremendous amount, but it’s more representative of what the rest of the world is doing from an enterprise standpoint. And I only make that point to say that this industry has matured when it comes to recognizing the value of technology. Eric was spot on. Financial services has slowed to get there, we’re still behind the curve, but we’ve at least matured enough to recognize the value of what technology will do to transforming businesses, whether it’s making them more scalable, making the advisor offering more valuable to their investor clients. The cat’s out of the bag, we need to invest in technology so people have the right solution. They’ll find their path.

Craig: Indeed. All right, so let me go over to Eric. So what are you thinking about this in terms of you guys work with a lot of partners. Are you seeing maybe they might be going away and how does that impact the space going forward?

Eric: Well, I think more broadly speaking, Craig, we’re at a time where we’re physically distant from each other and advisors are physically distant from their clients, but they have to figure out ways to stay socially connected. So if someone has a technology or an idea that will help advisors socially connect with their clients, I think now could be a great time. Look, we’re all starving for human connection. I don’t think any of us have ever been so excited to see our neighbors when we walk outside to get the mail. And you know, that’s exactly how clients feel. So we’ve talked a lot about different digital tools, an example of a company, an advice business that has done a really solid job of combining digital capabilities with digital interaction and social connections would be Personal Capital. And I think a lot of advisors, traditional advisory firms have to look at those business models and say, how can I tech enable my fiduciary process in a way that I can still stay socially connected? So if there’s a new startup out there that can help accomplish those objectives, now’s a great time to start. In fact, it’s a lot better time for business to start today than it was even 6-12 months ago. But they’re going to have to rise to the occasion and meet and help advisors meet those challenges that we’re facing head-on.

Digital Advice Vs. Digital Experience

Craig: That’s a good one. So, we’ve got a whole bunch of more questions that we came up with, but we’re getting some really good questions on the Q&A. So I’m gonna jump over to those, and I think Randy would want to answer this question that someone just posted – are we conflating digital advice solutions with digital experience and what’s the difference?

Randy: Maybe we are conflating them. I don’t know. I mean, at the end of the day, consumers are going to be much more focused on the digital experience around how they engage with their wealth. And digital advice or robo advice is synonymous with a pretty basic service, an online risk tolerance questionnaire pointing to a solution and an account opening process defined or constrained for a retail consumer. But there’s a lot more service and a lot more complexity when wealth complexity grows. All of the million dollar multimillion dollar portfolios and customers that traditional full service financial advisors work with have much higher degrees of complexity and service that come with that. I think firms that can lean into that and develop digital engagement, not just around a simplistic onboarding process, but really holistically enabling service and there were a couple of questions around digital service. There’s been an interesting friction over the last decade as robo advice or digital advice has developed around financial advisors not having a role in that and therefore being resistant to using it in their practice, and really resistant overall to enabling digital service features that would effectively reduce requests that would historically have come into their practice. I think we’re going to see a lot of that changing where FAs need to really focus on real value, real advice performing very unique functions that only a human financial advisor can do. And everything that can be digitally enabled and digitally delivered will be digitally enabled and digitally delivered in firms need to embrace that rather than hang on to administrative trivia as a means to deliver value. That’s really not gonna work post-COVID as we’ve all decided to really consume a whole new range of services digitally that historically hadn’t done.

Craig: Everything that can be digitized will be digitized. John, did you want to jump in on that?

John: I mean yes we are probably complaining a little bit, but yeah, the digital advice is one part of the market where yeah, that’s another investment type and that’s a great thing for a certain set of people. But the digital experience is a huge part of that, and it’s still an issue today with repapering programs. So you have a client at a broker dealer and the advisor wants to move from this program to another program. It’s a big deal. It’s a big deal. Nobody wants to deal, the advisors don’t want to do it. So you can have like three SMAs, you want to move them to a UMA, it’s like, Oh my goodness, I’ve got to repaper the client, or we all launch a new program and to shutter an older program you have to repaper the client. There’s still a lot of friction for the advisor, for the investor, sign all this paperwork. It’s going to take time to smooth those wrinkles out. We believe that there’s a custody count, and that’s a single thing. The custody platforms are, since there’s no custody providers on the panel, these things are really old and don’t move and don’t do anything else but transact the account, but you bring it into another system like Vestmark, I’ll just say that cause I’m talking, and you know, the account can go through this whole transformation from a mutual fund wrap to start with to an SMA to UMA and still keep the same registration on the custody system and that without repapering. The repapering part is more of a broker dealer challenge. But but they can design a single program to hold all those types of assets. And there’s some innovators out there that are working on that kind of concept and the technology can support it today. But yeah, the papering thing is a huge element of friction in the digital experience.

Craig: Well definitely. We’ve also seen that. Cheryl, do you want to jump in on the digital experience versus digital advice?

Cheryl: Sure. Yeah. So I think when we were part of Fiserv, Fiserv did so much work on digitalization within the banking channel. And we learned a lot from that. When you think about it, you can take a picture of your check and it gets deposited into your account. You can open up an account really quickly. Just to try it, I opened up a Bitcoin account, and saw how fast and easy that was. Take a picture of your driver’s license and it goes all the way through. So I think there’s obviously ways in which this our industry can do better, and it starts with, as John said, starts with the custody platforms, but then also the providers like us to help innovate and make those processes better. But I do think digitalization is here to stay. We could really put such a rewarding experience in for the advisors and ultimately the investors, so much better than they have today. APIs are much more important, really making sure data goes back and forth, much more important, to enable digitalization. That is a key area of focus for us. When I think about our business and being part of now the Motif partners, they’re so focused on innovation and co-creation and aligning with the clients. They brought a lot of that to us, which is great. So I do think you’ll see a lot more from us on digitalization, automation, efficiencies especially today. The cost to do things is so expensive. When you think about back office operations, technology can make that really streamlined and across saving where some of those people could be moved into different roles across the organization. So big focus, from ours and we learned a lot from the Fiserv world.

Clients Embracing Digital

Craig: Okay. We’re 3/4 of the way done. I think everyone is doing really well and we have got a lot of Q&A thanks everyone. All the attendees are posting questions, keep posting. We won’t be able to get to all of them, but we will send them all to the panelists and we’re going to be doing a blog post after this. We’ll try and get some of their responses offline and we’ll try to get to as many of these questions as we can. So the next question from the attendees is around self service, and I wanted to throw this to Stuart. Before the panel you had mentioned some data you had captured during the crisis, that you saw a 78% increase in access of your client portal. And someone asked, how important are client investor self service features in your client portal roadmap? So Stuart, do you want to take that? How important is that now?

Stuart: They’re extremely important, and really, we’re trying to support businesses that are supporting investors. So self-support is really driven by them. But the bottom line is we’re thinking about and adding a lot of capabilities, both from a client portal perspective, a mobile perspective. We acquired a business at the beginning of 2019, which is a natural language processing chat bot solution, which helps convert real speech to text, and through leveraging artificial intelligence helping, helping individuals self support. So we are investing heavily in that space. We believe that this environment, what’s happened here in the last eight weeks, it really emphasized that need. Obviously we’re all talking about digital, but that’s an enhanced version of digital. We’re just trying to make sure that we are refining the tools that we have, making them more effective, enabling the consumer to be able to experience what they are doing in financial services world. Certainly what they’re getting outside of this world, as Eric talks about when you look outside and look at what’s happening in entertainment or in retail and other parts the ecosystem that consumers deal with, we should have the same capability. So we see a lot of value in that too. We’re continuing to invest in that heavily.

Craig: Orion’s got one of the most popular portals. How are you seeing that being impacted by the crisis and is it becoming more important on your roadmap?

Eric: Oh, absolutely. In many of the same ways that Stuart mentioned, you see a lot of increased activity as people are looking at their account balances. But the portals themselves have to be a combination of providing transparency to the investor, and blending that with guidance from the advisors. And I think that probably most firms listening to this webinar today have client portals. You have client portals that are providing values, account activity, performance. But you also want to make sure that your portal is reflecting the planning component of your value proposition. Are you allowing people to come in and see the impact of the crisis on their financial goals? The Monte Carlo probability scores, how are those looking as it relates to the current account values that the client has today? And then beyond that, beyond using your portal to connect with your current clients, being able to use those planning workflows to connect with prospects digitally is really important right now because most of the new business that firms are bringing in today are a result of their old prospecting efforts that were in place 3-6 months ago. I think there’s a reality that we’re all having to get our heads around and that is fundamentally with this crisis, we are in a work from home situation for the next 12 months or maybe 18 months. And the impact that that’s going to have on our firms’ net flows, new flows, as we sit here today, we need to be thinking about that because a lot of the record flows that we’ve seen year to date are a result of the hard work that we all put in in 2019. And we have to go through this very big paradigm shift and ask what are we going to do to digitally connect with prospects so that we can continue the momentum that we’ve experienced year to date. And that is a really tough question that firms have gotta be asking themselves right now.

Financial Planning Crisis

Craig: Let’s go to the next question here. So that leads into your comment about planning, Eric. We got a bunch of questions about financial planning and on the one hand they feel that the crisis has driven more consumers to realize they need more planning, better planning, and that they’re willing to pay a little bit more to get it, especially if they’re getting close to retirement. So how is Orion addressing this need for more planning?

Eric: Well obviously we have great integration partners like Stuart’s MoneyGuidePro offering, and our friends at eMoney. We also purchased a client experience platform advisor that allows us to extend planning workflows, through our client portal. And that all of those ways are really examples of what Mark Tibergien said our industry was going through. And that’s a transition from having an asset management centered value proposition, to not only having a planning centered value proposition, but an experience centered value proposition. And right now, more than ever before, that experience has to be digital and we have to combine the best of human advice with digital interaction and capabilities. So we’re all working very hard. All the members of this panel I know are working very hard to allow our advisors to express their value propositions digitally. And you know, the time to do that of course is right now and all of us are all hands on deck ready to help advisors do just that.

Enterprise Decision Making

Craig: So we’re down to seven minutes left and there’s a lot more questions coming in. We have a question from someone everyone knows, from Lori Hardwick. Thank you, Lori for this question. What do you think might be the change for enterprise clients in the decision making process when selecting a new platform or service provider post-COVID? We’ll go to Randy for that.

Randy: I think it gets back to your question earlier around, Kitces’ wealthtech map and sensitivities around risk are going to be through the roof with all enterprise buyers. After a long bull market and a lot of stability and a lot of growth for a long time, I think a lot of enterprise buyers that maybe had been lulled into you know not being as concerned about risk, vendors that had good funding even if they hadn’t quite perhaps found market product market fit fully or achieved cashflow positive. As long as the solution was a good fit, there was a high degree of confidence that they’d be around. And maybe that likelihood even increased by the firm making the purchase decision. I think a lot of that is going to change. A lot of firms are going to be quite risk averse, and firms that haven’t found good product market fit, repeatable sales process, those firms are really going to struggle that 20% a projection that Doug did on the wipe out there. I think that may be well under. I think risk avoidance and risk management is going to be the order of the day for enterprise buyers. Doing more with fewer vendors, going deeper with existing vendors, is definitely going to be something that I think enterprise buyers will be looking at.

Craig: What do you think of being in the enterprise space and working with some of the biggest firms in the industry, some of the biggest clients, how do you think their decision making process might change?

Cheryl: I think what Randy said is accurate. I also think to add to that, firms are looking for better integration with their different components. So if they have a CRM solution, if they have different solutions that they need to be integrated with the platform itself, they’re going to find people, vendors who actually will do that. Who will be better integrated, who will have APIs, who have a robust API library. So that’s something obviously that we have today. I also think firms are looking for end to end. When you think about financial planning, Eric talked about goals planning and Stuart talked about financial planning, our financial planning tool will be integrated with our core trading modeling platform. I think that full end to end is really where people want to go versus buying best of breed. I think somebody said this earlier, the best of breed platforms out there, that strategy is no longer in place because of cost efficiencies that are needed, because of savings, and all those things that go around with having multiple platforms. So if you could have one platform that supports the entire value chain planning proposal, modeling, trading, reporting, all the way through, which I think a lot of folks on this panel have, then I think you’ll start seeing more growth. And I do think you’re going to see more come from increasing wallet share. Current clients want to do more with you. Cost is also something that’s there, but cost isn’t number one. That’s not what we’re hearing from the industry. It’s more around capabilities end to end, making sure you have integration points with other firms out there so you can actually give a much better experience to the advisor and to the home office and to those that are using the platform.

Client Conferences in 20121?

Craig: Right. The next question up, this is a really good question. I’m going to throw it to Stuart to start. Will your firm be holding a client conference 2020 or even in 2021?

Stuart: Well, 2020, unfortunately, no. I went to school in Austin and that’s where we were hosting it this year but I’m sad to say that we’re not gonna be able to do that. But, we are definitely planning on 2021. Nashville is the location May is the time frame. And we will be doing some virtual gatherings for 2020 as an alternative. And to the extent that we’re able to get back and in front of people, we’ll probably do some regional types of gatherings towards the end of the year.

Craig: Also really quick. Eric, what are you guys doing for conferences this year and next year?

Eric: Everything is virtual this year. We’re hosting a series of webinars and then we do have plans to host a conference in Phoenix, Arizona in late August, early September of 202. We’re hoping we can do that.

Craig: Fingers crossed.

Eric: I think that the reality is we’re 12-18 months away from a vaccine and so it’s tentative at this point to be honest with you.

Craig: Okay. Last question. Over to John, someone asked the work from home environment, is this going to be permanent? I know you were talking about your developers love this.

John: There might not be anyone coming back to work, in the office anyway. I think it’s different per group too. We have a lot of software developers obviously, but they’ve already gotten accustomed to Zoom, using doing it every day. It’s fairly distributed. Sometimes you find the right developer and they’re in Missouri. I mean, so you know, that group is in that mode already. But there’s no way we can force people back in the office. It’s going to be a question of really saying when you’re comfortable come back. And I think someone mentioned earlier, it’s probably about a 30% number and I think that’s about right, I know it’s less than 50%. I can agree to 25 or 30. But I really do believe in the social interaction. I think it’s very important that there is a workplace that people can come to, conferences like that, really bond personally. It’s going to be very diminished. This has definitely changed the workplace for… maybe forever.

Craig: Thanks John, you get the last word. It’s now two o’clock, we’re done. Thanks everyone. Appreciate your time.

Craig: Hey everyone, it’s Craig again. I just wanted to follow up and do a little outro after you listened to that webinar, I hope you enjoyed it. Some of the big takeaways for me were hearing about how the managed accounts industry has been changed by the crisis, what types of programs and products these leaders see increasing growth and market share and why. Some of their thoughts on robo-advisors and why we’re seeing so much inflow in assets onto those platforms. Self-service options, digital advice solutions, how planning will become more important and how some of these firms are doing more planning. We know a lot of these companies had bought planning tools, at least three out of the five own planning tools, and three out of the five are also TAMPs. We didn’t really talk about that, but it’s another interesting aspect of how the enterprise wealthtech business is changing. Another good question was whether or not they’re holding client conferences this year, or are they waiting til next year, because that’s such a big part of the experience with these firms. Will working from home be permanent, and how will enterprise clients – broker dealers, asset managers, banks – change their decision making process when they select new platforms post-crisis. All great questions, hope you pulled all that information out listening to this episode, hope you enjoyed it, and we will see you all again next time.




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 craig@ezragroupllc.com