Independent broker-dealers are rebuilding their online presences for a digital investing era, ushering in new client portals and offering automated investing for smaller accounts.
Cetera Financial Group CEO Robert Moore, Advisor Group CEO Jamie Price and Securities America CEO Jim Nagengast each mentioned client portals when asked in late January what new digital tools their advisors could expect this year. Cetera and Advisor Group’s plans include their own robo advisors.
Cetera announced its robo in late 2016, and the firm also unveiled a facial recognition tool last year. IBDs like Lincoln Financial Network have been working to streamline their onboarding, amid other changes. LPL Financial, whose robo launched in October, is also changing its platform, while Kestra Financial has announced a new portal through eMoney Advisor.
Advisors have pushed the firms to mimic the speed and look of digital investment platforms. Digital advice clients of all kinds will soar 844% to more than 17 million by 2021, according to a September study by Aite Group. In a nod to incumbents’ services, robos have also started offering human advisors to clients.
IBDs, though, are still lagging behind changing technology, according to Autonomous Research partner Lex Sokolin, who even deems “client portal” as an antiquated term. While the upgrades mark positive steps, IBDs should also be developing mobile apps and voice interfaces, he says.
“The meaningful mediums for client experience today are web, mobile, chat and voice,” Sokolin writes in an email. “To be part of a client's life, the way Instagram and Amazon are, advisors have to use technology that delivers financial data in the way that clients want to consume it.”
“Without question, reporting websites rather than PDFs or paper documents for clients are paramount,” he adds. “It is odd to even have to say that in the year 2018.”
Advisor Group’s Price acknowledged the industry still processes a number of transactions by paper. The IBD network of four firms with more than 5,000 advisors entered into an agreement with the clearing firm Pershing, the robo advisor Jemstep and the asset manager Envestnet to develop the client portal, he says.
The firms are working to “build out our entire technology platform from a seamless account opening standpoint,” Price says. The software would manage the onboarding process, including e-signature capabilities. Advisor Group expects it to launch in the third or fourth quarter, according to Price.
“It’ll ultimately end up having a robo platform, but that wasn’t the strategic intent from the start,” he says. “It really was, ‘How do we help our advisors become more productive in their offices and not have to deal with paper and pushing paper back and forth?’”
Cetera, the largest IBD network, with six firms and more than 7,700 advisors, will open its new advisor and client portals in the second quarter, according to Moore. The platform will serve as “the main chassis for our advice-centric experience,” he says, noting Cetera is building it out internally.
The portal will be integrated with multiple customer relationship management programs, planning and asset management software and automated investing by Envestnet. The robo would allow advisors to track individual family members’ different accounts in the same place, Moore says.
Advisors and clients would design their landing websites under the new portal, providing updates on their portfolios and content about their hobbies. The pages would also incorporate blogs and chat for a community feel, though stopping short, per regulations, of acting like a social network, Moore says.
“Not everybody likes to just sit around and look at their money,” he says. “It’s a very presumptuous thought, that the first thing anybody wants to see is what happened in the stock market today.” Moore makes an exception for days of high volatility.
“And so, what are you doing the rest of the time?” he adds. “The stats are pretty clear, that people actually don’t access their account online that often. You have some who do a lot, and then you have a whole bunch that hardly ever do, because there’s nothing there.”
Ladenburg Thalmann in January bulked up its tech focus as well, creating what the network of five IBDs with 4,000 advisors calls its innovation lab. The firm plans to use it as a forum to harness advisors’ ideas and executives say they’re considering acquisitions and planning a conference this year in Silicon Valley.
Securities America, one of the Ladenburg subsidiaries, rolled out its client texting app in January. The firm’s new client portal will arrive late in 2018 as “probably our biggest deliverable” to advisors on the tech front for the year, Nagengast says. The portal would help speed the secure flow of information.
“Where we see advice going is, you have to have a closer tie with the end investor,” Nagengast says.
Kestra, the No. 13 IBD, will offer its 1,800 advisors the new client and planning portal through eMoney starting in the second quarter. The platform would include self-registration and onboarding, secure document storage, mobile access and other features, according to the two firms.
"Advisors’ jobs are more challenging than ever before," Stephen Langlois, eMoney's head of business development, said in a statement. The new platform will provide Kestra's advisors with "the support and cutting-edge tools to scale and grow their businesses."