10 May2019
Watch What They Do, Not What They Say – Where Are Financial Services Firms Putting Their Tech Focus?

Financial services firms are investing in technology, but it might not be where you would expect. While media reports have focused on AI and other bleeding-edge financial services innovations, a recent BNY Mellon Pershing survey of top financial services executives indicates that less than 10% are investing in this sort of technology. Yet, nearly all – in fact 80% – indicate they are increasing their investment in technology overall.

So where are the dollars going? According to that same Pershing study, top financial services firms have earmarked those dollars for improving their client relationships. As indicated in the study, 45% are investing in client experience technologies and 27% are investing in building client websites and other portal resources. However, by far the largest segment of 62% cited as their leading priority investing in technology which would improve the advisor-client relationship.

This is sound thinking on the part of top firm executives. The last year has proved to be a game of musical chairs in the field of financial services as advisors and large teams have left wirehouses in favor of RIA, Independent, and Hybrid firms. What these firms offer in spades that is woefully lacking at wirehouses is corporate transparency, a diverse product service mix, technological flexibility, and an unsurpassed level of advisor support. The end result is a business model which provides advisors the structure, accountability, and growth potential that translates into better overall performance and stronger client relationships.

If leading financial services firms want to stop the bleeding and end ceaseless attrition in their ranks, it then becomes imperative to make a strategic move that invests in both their advisors and their clients simultaneously. For this, there is no better solution than technology. Technology is unique in that it enables an advisor to more successfully manage their business through scale, efficiency in service and asset management, and the speed at which they can respond to client requests. In turn, technology solidifies the adviosr-client relationship by providing client engagement at a much higher level.

Examples of firms attempting to increase and stabilize their headcount through technology investment are many. LPL Financial has pledged a $135 million dollar budget to technology, primarily focused on the roll-out of its new ClientWorks platform. Morgan Stanley’s technology platform WealthDesk is being supported, according to the company, by a heavy investment throughout 2019 in training its advisors to maximize the system. UBS is continuing to invest in its two recently launched technology innovations – UBS One Source, geared towards corporate clients and equity plan participants, and the Broadridge Wealth Platform, for which UBS serves as the anchor client for the Fintech firm’s advisor productivity solutions.  The firm I believe that is leading the “technology for advisor to better serve clients” way is Raymond James, who last year spent more than $300mm and plans to spend over $1bb in the coming years.

The list goes on and on, yet, what will be telling is if these firms will successfully be able to engage their teams in utilizing these technology platforms in a meaningful enough way to stymie the flow of advisors out their doors.  All the technology in the world can’t help if the firms cannot have a large majority of advisors utilizing what the firms have put on your desks.  History has proven that most advisors only use 15-20% of the technology available to them.

Ultimately, technology – while a positive step – is not a one-stop shop for fixing the relationship paradigm between the firm and the advisor and by default the advisor and client. Technology programs need to be rolled-out in concert with a large scale plan that offers a depth of top-down operational changes, marketing shifts, real-world and consistent training, and business model adjustments in order to affect real change. It will be interesting to see if the focus on technology will be the panacea that larger firms are hoping for in repairing their advisor relationships or if it will be another failed attempt that further reflects the loosening grasp the wirehouses have on the financial services market of today.