Atop asset management, retirement, financial advice and insurance, Voya, which manages $48 billion in assets, has multiple business goals.

So it has to move beyond the perception that it is a singular service provider, says Voya Financial Advisors's Tom Halloran, president of its broker-dealer. One way the firm is doing that is by tying together its institutional businesses with retail, mixing technological innovation with old fashioned salesmanship, even considering the deployment of a robo advice platform.
"I want to go from being considered an insurance broker-dealer, to an independent broker-dealer that's owned by an insurance company," he says.

Managing that transformation, Halloran explains, has meant examining business lines and redeploying resources, and getting smarter about serving advisors in and outside of Voya.

The firm for instance launched two services for advisors that removes all of the portfolio construction and paperwork, leveraging its advisory wealth solutions platform.

Voya Financial Advisors President Tom Halloran says the firm is inclined to seek an acquisition in order to add a digital platform to its offerings.
Voya wants to be America’s retirement company, says Tom Halloran, president of its broker-dealer. Bloomberg News

That wouldn't have been possible, Halloran explains, if the broker-dealer was still relying on third-party providers for such technology.

Halloran spoke with Money Management Executive about the technological, sales and regulatory issues.

An edited transcript of the conversation follows.

What are some changes you've noticed in the brokerage space?
The business is going through a lot of change, no surprise. I will tell you that it pays to be with a big brand today.

We are seeing a nice trend, which is we're finally getting folks out of wirehouses. What's happened as of late is we're getting guys from Merrill Lynch, Wells Fargo and Morgan Stanley. I think some of the cache of working at a wirehouse has left.

The other piece is technology. If you think about systems that we use, most of us use the same stuff. We all use MoneyGuidePro for financial planning, we're all connected to Morningstar, and we use Salesforce and SMARTworks for CRM. So the notion that if you're not at a wirehouse you don't have access to all this technology, that also is starting to subside.

How have you managed the institutional aspect of the business?
We have made big strides in the advisory space but we don't have a lot of product. Our advisory business is up significantly in the last few years. It wasn't a big focus of the firm before I got there, but after coming here from Merrill, [it was a mission] to do a way better job at financial planning and at advisory.

There are three big things that have led to our success in advisory. First and foremost, we have a great advisory platform, which we didn't have before. We literally relied on third parties, that's all we had for a long time. We had no proprietary solution. So now we have advisory wealth solutions platforms powered by Folio and we've got $9 billion, that's a good chunk of change.

When I started here, 62% of our revenue was transactional, 28% was reoccurring to advisory. We flipped that, and today, three-and-a-half years later you're at 28% transactional revenue and 62% advisory. One factor was that we needed a better team. We had no field-facing resources.

Our advisory sales team now will go into offices because like most places, reps knew they needed to do more advisory, but they didn't know how: 'I don't know how to build models.' I could build a portfolio; you manage it and trade it. 'Do I need discretion, don't I need discretion?' As silly as that just sounded, that's kind of what happened. They wanted it, but they just needed a woman or a man to walk in and show them the technology and make it work.

That sounds easy enough.
It hit the next level about a year and a half ago because after you figure out how to use the technology, and you don't have to handle the trading and the modeling and the proposaling, you then tell us what you really don't like is all the paperwork. Unlike a brokerage where you write an ETF trade or stock trade and it takes five minutes, just don't make an error because then you're paying for it on your own, but that's a different story.

Some of these independents, it's one man, one woman operation, they work in their house, right, or they work in an office, that hasn't changed in the IBD space. You're lucky if you can get two folks in the same town that will share office space, right, maybe an assistant. But the paperwork is daunting.

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"We've identified gaps to success and then have gone in and tried to restructure it to make sure that people are getting what they need."

We launched a program about 18 months ago called our Advisory White Glove Service Team, and they take care of all of that. They'll help you fill out all the paperwork, they'll show you how to do it, in many cases they'll do it for you, and then all you have to do is allocate and put the portfolio together. So you'll do your own proposaling and trading. And that made a significant difference because all these smaller offices allowed us to quickly added scale.

It's like anything in business, and maybe old school business - if you see opportunities to grow, you need to put muscle and resources behind them. I think we've been able to do that. We've identified gaps to success and then have gone in and tried to restructure it to make sure that people are getting what they need.

We've noted advisers are seeking help from firms on products and planning.
This year in January we launched a financial planning team. If you're an advisor today at Voya, we'll do financial plans for you and for your clients. Most firms will say you've got to be good in advisory and we want you to do more financial planning. Advisers will agree, but then wonder, 'Now what, I've got to go get a CFP? First of all, I've got to make a living, I can't go to all these classes myself.'

We had a group called the advanced sales team, and all they took 12,000 phone calls in 2015, answering all kinds of tax-related questions and trust-oriented questions. It became pretty apparent that we've got a big need here, why don't we just solidify the team and then we'll get the proposaling done, you guys can help do the financial plan for them, and that's what's taken place.

And so through financial planning, what we found is, I'm probably a great example, I'm an investment guy, I worked at Putnam, I worked at Merrill and I work here, I know investment and I know product.

If you said to me let's do a financial plan and does this client have enough life insurance or not, I might be able to figure it out by asking someone else, but I don't know that stuff well. But we have people that work at Voya that know life insurance amazingly well.

What sort of changes did you make to comply with the fiduciary rule?
So away from third party tools, we haven't done any changes there. I will tell you this, you wouldn't believe how many people have third-party solutions that they want to sell me, right, that world is vast. But what I would say, I think we have better integration at the model level. When you look at fee comparison worksheets, this is a big change in the space where you could just say, hey, I sat down with the client and we talked about a couple of things and I bought this product.

Slideshow
Overvalued? Funds with the highest price-to-book ratios
If these ratios increase along with stock prices, how high is too high?

Now what's being asked of advisors is show your work. I think about my son in the fifth grade math class: 'You got all the right answers, they're right there, but where's the work?'

'Well that was on the piece of scrap paper that I threw away.'

Now that scrap piece of paper is attached to that application, I showed you what these fees were, and I think that is probably the biggest change is that advisors are being asked to show their work and at the same time mention alternative products that you didn't use.

That's a big change, because before you could say that you had the conversation but there was no visible documentation. And so as fiduciaries you need to your recommendations to be defensible. I don't want that to come off too defensive, but the reality of it is we're back to showing our work.

You still have some reservations about the rule?
I don't think anyone would argue for some revision of the DoL rule. Mostly I think we all want the SEC to come back in and regulate both qualified and nonqualified.

Let's just have a uniform standard. If they come up with a uniform standard then I can live with that. And then a little more clarity on certain points, such as what's our favorite, reasonable compensation, what does that really mean?

From a firmwide perspective, are there any innovations that Voya is mulling over?
For me, specifically, what I'd say is robo is of interest. I don't have one yet, I want one, it's just a matter or how and when. I think this whole notion of digital advice is going to continue to grow and develop. And if you look at some of the firms, some of them are better at it than others. Betterment has a huge name in the marketplace, but they don't manage a lot of money; $3 billion is a plan at most firms like us or Merrill Lynch."

I think digital advice and robos are things that I'd like to do more of going forward.

What is Voya doing to attract younger employees in the retirement space specifically?
One of the things that we have the benefit of is constantly signing up either new hospitals or new universities. That's really what it is, it's a 403(B), 457 plan market. They're constantly looking for younger professionals to come in and be enrollers.

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"I think digital advice and robos are things that I'd like to do more of going forward."

It's hard work, though. A 55-year-old guy doesn't want to walk in and say, 'Hey, I'm knocking on your window because I saw you walk into work, do you want to sign up for the 403(B) plan?' But you've got to pay your dues in some way.

So as that continues to be a growth business for us, I'm fortunate enough to bring in younger people that other firms don't have the ability to attract.

Once you get into the firm, we have big meetings and conferences like most firms do, and young employees get a chance to meet and greet and develop relationships.

How do you view competition in the IBD space?
I still think you're going to see consolidation. One of the things that we did very well, and I'll give credit to my boss and the executive committee at Voya, when the DOL came out and all the rumblings that we heard, we didn't stop.

We didn't spend money and we didn't make any bets. I'm considered a large IBD because I have 2,000 reps, so I think the larger firms will continue to start grabbing the small ones. I think it's just a matter of time.

There's a lot of talk of IPOs right now, AXA is doing one next year, there's talk that John Hancock might be spun off. What lessons do you think Voya learned that put the firm ahead of the pack since you were spun off in 2013?
If you think about it, in May of 2013 the stocks went off at $19.50, I believe the high was $44, and we're probably about $37 today, not that I own any. Like anyone else, it's all about shareholder value.

When you want to create shareholder value and if they think an IPO is better than a sale or a partial sale with different business units, then that is what they should do. It obviously worked for Voya.

It will be hard to argue that when you don't double your stock price in less than a five year period of time, that's actually pretty good.

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Andrew Shilling

Andrew Shilling

Andrew Shilling is an associate editor for Financial Planning, Bank Investment Consultant, On Wall Street and Money Management Executive. Follow him on Twitter at @AndrewWShilling.