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Why firms are ‘running’ to advisor desktops: Q&A with In|Vest speaker Shirl Penney, Dynasty Financial Partners CEO

Q: What are tech firms looking to provide to advisors?

SHIRL PENNEY: Ultimately advisors are in possession of the cable box — a central desktop. There are 32,000 individual RIA entities that are not connected in any other way, unless as a tech provider you are able to provide a desktop experience. Then you become very valuable to anyone who wants to be a part of that group of advisors. Firms are fighting, running quickly, to create the advisor desktop and do it at scale.

Shirl Penney

How are the technology providers trying to differentiate?

You have to have application programming interfaces and easy integration. Our advisors want everything in one place without toggling around a CRM, which doesn’t communicate with a financial planning application. They want those capabilities tied into one easy account opening for clients and prospects. And, on a client level, if advisors aren’t living in their clients’ phones they are going to become irrelevant. The average American spends six and a half hours a day on their phones. They have to be living in their clients’ pockets.

What has the potential to be the biggest disruptor in the next few years?

Artificial intelligence has the potential to be disruptive and also potentially destructive. Some jobs may be sacrificed, like in trading and rebalancing or people in operations, where AI will make those jobs more efficient over time. For example, tools that help think through behavioral patterns with clients to help them better understand why it is that they are making various decisions around the structure of their wealth and how to manage it.

Why the massive migration to the independent channel?

It’s a rare moment where the alignment is pretty positive for the advisor. They are making more money — and let’s face it — that’s what people care about. There are better incomes and they get to own equity in their business. There is less bureaucracy and more choices when it comes to implementing technology. On top of that, advisors get to be fiduciaries.

What are the dangers for RIAs?

The biggest threat to the acceleration of the migration toward independence is inertia. Good is the enemy of great. Some advisors are approaching retirement and will just take the sunset deal and want to do the work and go through the knotholes of moving a business. It’s something that is very real. But, technology is continuing to make that process easier. Firms are able to provide electronic signatures for clients in transition. They’ve got it down to a science and are able to move people much more quickly. Essentially, the advisor has to have a desire at some level to be a CEO and spend time building a business and not everyone does.

Will tech giants, like Amazon, enter wealth management?

Our industry is pretty heavily regulated. They will probably continue to do more due diligence before they jump into the fray. The complexity of having that large portion of your company now being examined by various government agencies is probably something that is less desirable. Although, you are seeing the tech companies move into financial services in other parts of the world, so conceptually, it makes sense. I just think the challenge domestically is the regulatory environment. But, can I envision a day where clients can go to their shopping cart on Amazon and drop in a couple mutual funds and a financial plan? Sure, but I just don’t see it in the immediate future.

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