Q: How have you seen technology change the financial services industry over the last five years?
AARON SCHABEN: We’ve become used to companies like Amazon, Uber, Google, Facebook — any of the cool companies that have changed our lives. How much has finance truly changed over the last five years? When I ask this question, what most people say is that they no longer have to go to their bank because they have remote check deposit.
These companies are changing client expectations across industries. With fewer advisors and increased expectations from consumers, firms have to have client data to provide an experience that allows us to deliver a more customized relationship — a more customized touch with fewer humans.
What kind of data do you need to deliver on customer experience?
We have a data warehouse — our central repository of client data. I think the best way to think about it is that it is our source of truth. If you have one client, you probably have two to 15 different areas that you’re pulling information from. Without a data warehouse you have to go to multiple sources and then sometimes you question which point is accurate. Which is their old address and which is their new one? What the data warehouse does is bringing it all in one place so you have one source of information.
What is the benefit of keeping your own database?
The whole purpose of it is to empower the client and the advisor to make sure that we’re doing exactly what is going to help them achieve their goals. Data allows you to have a very unbiased view to deliver on those goals. Client data tells advisors what they need to spend time working on. They’re able to spot trends. Data allows them to be able to be unemotional so they can step back and make a great decision for their client.
What should wealth management firms spend on technology?
This is why there will be winners in this space. The amount of money that has to be spent — I don’t think a lot of advisors even comprehend the spend and commitment you have to make. It’s not just the money. It’s the people and the time that goes into it. A lot of people think about an investment as “I have to write this check.” If you’re building something big, it’s an ongoing check. [Carson Group has spent $70 million to improve its technology, according to the firm]
How have you seen tech enable growth in the industry?
Five years ago when I asked advisors what a firm needed to have in assets to truly compete, it was $500 million in AUM. A year ago it was about $1 billion. With all of the changes that have been happening, when I ask people that now, people are giving me a lot of $2 [billion] to $5 billion numbers. Those are the big-sized firms that are going to continue to invest in tech, marketing, people and the numbers.
Are you saying advisors need to be part of a bigger firm to compete?
To deliver the experience clients are expecting now, you have to have the team and the technology to go along with it. You have to be part of a larger firm, but, more importantly, you need to find the right partner. You need to have a partner that is focused on innovation, on delivering innovation, on constantly improving, on getting you to the next spot you need to be. I truly believe that the advisors making a decision — sub-$100 million in assets — to go it alone are truly stating that they’re focused more on their cash flows to support their lifestyle than the ongoing success of their business.
