What do most technology vendors struggle with?
Scale. A lot of them struggle with scale. They don't realize what it means to support the level of business [of a broker-dealer], where they've got hundreds of thousands of accounts. It's such a small part of the market, but that’s often difficult for vendors to understand. They've never gotten to that point. They claim they can do it, but it’s always a problem.
What other problems have you seen?
Implementation is always going to be an issue. Most vendors underestimate the resources required from their end to generate a product. That's a very common problem. They'll say: We'll have it done in six weeks and it takes 12.
What should firms keep in mind when it comes to the challenges of scale and implementation?
You want to get referrals. You want to talk to other firms that are like you that use that vendor.
What are the key indicators to tell if a vendor will be easy to work with?
You want to ask how easy it is to use their APIs and if they're self-explanatory, meaning my programmers can get right in. Or is it really one-off customization where I've got to call you, where I need to work with the vendor’s tech staff to figure out how this stuff works? That's a question a lot of firms don't know to ask because they don't realize that it’s an issue.
What do you think will be the most transformational technology for RIAs in the next several years?
It should be artificial intelligence. I think it’s going to be coming in sneaky, small ways. It's going to be small steps.
You're going to see little things like chatbots … [Some of] these systems have been around a while and they're becoming so complicated. If you look at the Envestnet platform, there's so many layers of options and functionality because it is so robust. It becomes difficult to know where things are. So what the chatbot does is you can log in and say: I want to open a new account, and it takes you to the right screen. Those things will be saving advisors a lot of time.
What else are you seeing with AI?
Next best action is a very popular AI feature. Whereas in the past it was only available to the very big broker-dealers like Morgan Stanley, it's going to be moving downstream as it gets easier and easier to implement these things at smaller firms. Smaller firms will have the ability to walk in in the morning, and the advisor's got a screen that says you need to do these five things. You need to call these 10 clients. You need to send out this email.
When do you see all this really coming into fruition?
It's already here. I've already seen it. It will take a little while to get integrated. It will take a little while for people to accept it. Once they do, they're going to realize that it's so easy.