While firms scramble to provide shiny tech solutions to millennial clients or solve retirement issues for boomers, a large swath of the population may be overlooked.
Generation X clients, those aged 35- to 55-years-old, are facing complex financial decisions and need help finding the best course of action, says CEO of United Capital Joe Duran. Issues such as upgrading a home, or sending a child to private school, can be complicated matters that involve complex financial planning.
“It’s all about the baby boomers and the millennials,” says Duran. “No one is going after Gen Xers. They’re not rich, but they have a house, stock options. They’re just trying to juggle it all.”
The Newport Beach, California-based RIA and its subsidiary, FinLife Partners, launched FinLife CX in April, a white-label system that includes a client-experience platform, while offering training and coaching to clients. The new platform evolved from FinLife OS, a version that United Capital launched less than two years ago. Unlike the newer version, the first required advisors to convert from their existing CRM.
FinLife Partner firms now have $10 billion in assets under contract with 27 firms, Duran says, and many also use United Capital’s investment platform. The firm added more than $4 billion in assets in 2018, half of which came from organic growth, he says. More than $2 billion came from acquisitions.
Financial Planning caught up with Duran on the sidelines of the Schwab Impact 2018 conference in Washington, where he discussed the red hot (and very frothy)
M&A market, headwinds for RIAs and if Amazon will ever break into wealth management.
How hot is the M&A market?
This is definitely the most competitive market I’ve seen since 2007. It just makes no sense at all to make all-cash deals with huge multiples. We saw this movie before just before the demise of the big aggregators in 2007. The aggregators are overpaying and very aggressive. If you’re coming into this casually without a very long balance sheet, you could be in trouble. There’s plenty of opportunity, but it’s very frothy. I don’t see a good reason for it to end.
Will the robos continue to gain market share?
I think some of the shine has come off the robos. Robos are fine until you have enough complexity, and enough to lose, that you want to go out and get a human. TurboTax is great until you need an accountant because you don’t want to go through an audit alone. LegalZoom is great until you get into real trouble and need a lawyer. Technology might make the marketplace bigger, but can it really change the way we do business? Will it ultimately disrupt financial services? I don’t see it that way.
What should advisors look for in tech solutions?
Does it help serve clients better? That’s number one. Does it give me more data? I have to have more information to make decisions. I know the client is 42-years-old and just had a child. Now, I know what those clients typically need from me. I know what people in their situation need. Third, they have to be at their clients’ sides for every major financial decision at all times. The technology has to go way beyond investing.
Will Amazon enter?
“There is very little reason for them to do it today. I’m not sure they’re convinced they can deliver advice the way we can do it and if they can do it, better than Vanguard. Vanguard is the Amazon of our industry. The reality is, Amazon would need to partner with Vanguard or BlackRock and then I could see them doing something. But it wouldn’t be much more than a solution for sub-optimal clients.
What’s the biggest opportunity that advisors are missing?
“It’s all about the baby boomers and the millennials. No one is going after Gen Xers and their biggest thing is tradeoffs. Can I afford private school? Can I afford to take time off work? Those people are the highest potential earners that are just strapped for time and strapped for resources. They are much more sophisticated [in their needs] than a robo service, but too small for typical RIAs. They’re not rich, but they have a house, stock options. They’re just trying juggle it all.”
