Can digital fix this 'embarrassing' problem? Q&A with Schwab's Andrew Salesky

Register now

Why have wealth management firms struggled to simplify the advisor and investor experience?

ANDREW SALESKY: There’s a lot of reasons why financial services hasn’t gotten there. It’s an inherently complicated process; trust is paramount, it’s highly regulated, there’s legacy technology. There’s all these reasons we can say why it hasn’t happened, but that can’t be an excuse. The last best experience is what the client is expecting going forward and we’ve got to make things incredibly simple.

That’s why we talk a lot about truly digitized experiences. You look at the past era of digital account opening, it’s really been about digitizing paper, not digitizing the experience.

What I’m hearing from our clients: Help me with digital account opening, can you get rid of the paper. Part of digitization is, we won’t get rid of paper in the near term because some clients still want paper. But we shouldn’t require paper. And we have many forward-leaning advisors that say, I only want to work with a client who is fully willing to enable a digital experience. We want to feed that opportunity. And to me, that’s the big opportunity, this idea that innovation, the new innovation is doing the basics.

The industry is buzzing about the uses of data. How are firms actually accessing the full potential of their proprietary data?

To do true predictive analytics and enable machine learning takes a lot of data. Not all firms are generating the quantity of data of Google search and Amazon transactions. You also need the technology that enables you to capture and centralize that data. At Charles Schwab, we’ve had an effort underway to leverage Hadoop technology to create what we call a big data environment. We are trying to centralize all of our data to drive analytic use cases and allow our data scientists to go in there and really test and learn, play with the data to see what really has the greatest probabilistic value.

The challenge is you’ve got to have a lot of data to drive this, you’ve got to be curating it to get the most value out of it, and you’ve got to avoid overly hypothesizing what the answer is before you prove it out.

Since you mentioned Google and Amazon, has Schwab examined how those organizations manage their data with the intent of emulating a practice?

We’re very focused on our first-party data. We’re less focused on aggregating other third-party data. It’s very challenging; everyone to a certain degree is a wild garden. The key data providers have recognized the value of their data. Google is not interested in sharing their data, they’re going to sell you services based upon the insights they can derive from the data. Fortunately we are a large enough organization, so our focus is on how to better curate that data we already have and serve up those use cases.

Predictive analytics is all very interesting, but there’s a lot of the basics that still is untapped value. For example, when we do our benchmarking study, we aggregate data at the firm level. A lot of the firms want to see that disaggregated for their individual offices. Maybe the e-authorization option for wires and other money movement varies across their five offices. Can we make that transparent to firms, can we provide that on a weekly dashboard? So this idea of just even just simple dashboarding, peer reviews, frequency of data, reinforcement of the key objectives, there is still so much of that basic curation that we have an opportunity to do, both on the advisor side as well as on the retail side.

Speaking of retail, are you surprised the industry is still wrestling with the issue of delivering better user experiences, even as it expands service across multiple devices?

We are so fortunate to have the scale enabled through these electronic channels. I think about how many call centers we would have needed in the old model if we didn’t have the benefit of and mobile capabilities. It’s been incredible and helpful to see the mobile adoption. We’re at a stage now where mobile usage is starting to peak web-based usage, and we’re now in a development paradigm where it’s mobile first.

The challenge with developing feature functionality is people get used to the way they see it. Something like, you’ve got to be careful how quickly you change things. Customers go to the positions page on and we make a small change and they are like, ‘Wow, what happened?’ It’s just their trusted source of information, so the speed of evolution for something like that, you have to be sensitive. When we launch a new page, we make the old one available for a very long time. We might not default to the new one for a very long time because people are just so comfortable with that. So there’s a reason for the pace of change, sometimes that has to be managed.

Some peer firms in banking and financial services now say they are technology companies. Would Schwab also make that claim?

We see technology as probably the most powerful enabler of scale and efficiency, and we look to capitalize on that potential. But we are, first and foremost, a client service firm. I view us as much more of an investment firm focusing on getting clients to and through a successful retirement, either directly or through the providers that support them. Technology, great client service, superior product innovation and operational rigor are enablers of that, so it’s part of the puzzle.

But I also think by saying you’re just a technology firm, you are discounting the value of the live interaction side, and we believe it’s about the power of technology and people. It’s both, irrespective of channel. Technology that enables the live channels to do more is really part of our strategy and it’s always been part of our strategy. When I started at Schwab in 1995, our call centers were inundated with clients that called in to do quote calls: ‘What’s IBM at, what’s Apple at.’ That was the majority of calls. We still get a few of those, and some people just like to chitchat, but thank God for the web.

For reprint and licensing requests for this article, click here.
RIAs Big data Predictive analytics Machine learning Fintech Mobile technology Schwab Advisor Services Google Amazon