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Advisor software firms find a consulting role

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Tough competition to be the software of choice on an advisor's desktop means good partnerships are now the lifeblood of independent providers.

And established trust with an incumbent has become an opportunity to turn a product relationship into a consultative role, says Advicent CEO Angela Pecoraro.

Growing NaviPlan, its financial planning software offering, the firm's latest integration is with Envestnet, after having signed up San Diego-based Shareholders Service Group.

Pecoraro discussed what her Milwaukee-based firm has learned working with a number of wealth managers and advisory firms as they figure out how to transition to a digital era of wealth management.

An edited transcript of the conversation follows.

How would you describe the enterprise market right now?
They’re taking note of all the technology advances. We’re having really great conversations with them about advancing their technology platforms. They’re bringing in a lot of interesting new parties to the conversation. Traditionally we’ve been operating within the wealth management divisions of the firm or a small niche department, and now they’re expanding their planning desires across their entire organization. So we’re now interacting more with other areas of their business just to explore what their technology play is and how we can maybe fit into that. So that’s been great.

What are the challenges that firms are asking you to solve?
They are looking to provide an end-to-end solution for a variety of different clientele that they serve, whether it is a type of calculator, a goals-based planning solution, or even just a quick electronic fact finder, sort of a needs assessment tool that acts as a lead generation application to get more clients into the mix.

They’re also looking to provide planning for their existing clients that don’t yet plan with them. So how can we introduce planning in a nice, easy fashion but also kind of bring them along into the other parts of the technology. And then, of course, as we have worked with many of them for a long time, they want to make sure that we continue to advance our comprehensive planning platform, which we are absolutely doing.

Different firms are attacking it in different ways. Some want to have the full boat solution of one solution carrying them through. Others are just getting bits and pieces and biting off what they can chew right now, testing the waters and getting into that space.

These firms are in a new territory. So some are more confident in what they’re doing, some are playing it safe and like I said, going step by step. They all prefer to have the same experience throughout, so naturally it would mean that if you could have the same technology provider and the technology, and the user experience is the same when a client is actually clicking around. But no one has really mastered that yet or executed on that full spectrum yet.

For many incumbent firms, there's a lot to be upgraded.
A lot of it is paralysis. There’s so much to decide, it’s a big corporate decision and any decision will impact thousands and thousands of clients, existing or new. And it’s their brand. There are a lot of complexities with making those decisions, so I understand why. Our stance has always been, just get started, pick a target audience to test the waters, and get in the mix.

Clients are allocating budgets to a client experience. Each firm is trying to figure out how they earmark pieces of that budget and in what ways. Maybe they go after the higher end of the millennial market that doesn't yet plan, or capture more assets from their existing clients? They’re trying to figure out where their biggest return on their investment will be.

There's also the practical issue of migrating legacy technology systems.
We have integrated into proprietary systems with these large institutions for many years, whether it be a CRM or some sort of data warehouse. We have those very robust custom integrations built in, so that data is already flowing. But we understand their business and we understand the risks. It’s not just the complexity of the technology, it’s the security, it’s all of the regulation they need to abide by that we need to make sure as data is flowing and our systems are connected, we’re being true to those requirements as well.

How has the DoL rule impacted what help firms are seeking?
With any major industry regulation you run and try to make sure that you are not going to be left behind and you’re doing the right thing. Still, what we’re seeing is more of a methodical approach to implementation. No one is stopping work, per se, but they’re making sure it’s done right and it’s scalable, that the investments they’re making can be leveraged in other ways, so that when the next regulation comes down or when the next piece of technology they want becomes available, they’re prepared and they don’t have to re-do anything. It’s like any other practice or procedure they need to maintain.

How much of the client experience can be digitized and still be as rewarding as having a face-to-face conversation?
There are two things that technology can do. It can really offload a lot of the mundane, the non-value add tasks that the advisor needs to do. But it can also enable the value of the advisor considerably and help explain concepts and how track progress towards goals. So it’s in our mind an enabler of that experience more than a replacement.

We obviously are in the business of financial planning, we believe in the electronically enabled advisor. We’re staunch technology advocates, but know that this is a conversation across the table with a husband and wife, planning for things that are very important and personal. No machine in my mind can really replace a conversation about a very important life event.

There’s going to be a need for an advisor forever, in my mind, and that technology is here to help that and make sure that those conversations can happen on a very regular basis, and that advisors are not bogged down at their office doing things that don’t really add value for the client.

Lately we're hearing a lot of opinion that women aren't represented in technology or finance. What’s working and what’s not?
If you’re doing a good job you should be rewarded. I’ve put that lens on my own career my whole life. Work hard, learn everything you can, get the results you need. If you don’t, figure it out, try again, find some good mentors and deliver results. I think those that do should be rewarded and have potential to even do better greater things in any business should be rewarded, whether it’s a man or a woman.

I’ve been in technology and I’ve been in the greater financial services industries, both of which are fairly male dominated, and 15 years ago when I started, I was one of very few women in the room, and actually one of the youngest as well. I tried to learn as much as I could so that I could go toe-to-toe in a conversation and be well-versed on the topics that only experience can really lend.

What I have noticed over the years though being in software is that women have traditionally been in tech support or client services, or maybe even a little bit in sales, and we’re seeing more and more come in through operations. So developers, quality assurance folks and IT people. We have managers in all of those functions that are women at Advicent.

Again, we believe the most talented people — those who deliver results, are a cultural fit and have leadership capabilities — should be in those roles. What can be done differently is making sure that we’re providing the opportunity and making it interesting for everyone to get involved into software.

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