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Best Ideas From Leaders in Digital Wealth Management

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Early on during the climate change debate, naysayers advocated against scientific study and analysis. This is similar to the digital advice revolution, with those who deny the “digitalization” of the advisory and wealth management industry.

It was clear to attendees at SourceMedia's InVest 2015 conference on disruption in wealth management that the age of digital advice is here to stay. However a complete transformation across the $25 trillion financial advice market is likely to take another five to 10 years. The time to capitalize on opportunity then, is now. (SourceMedia is publisher of Financial Planning, On Wall Street and Bank Investment Consultant.)

With over 400 wealth management executives attending the inaugural June event in New York, it’s evident that the industry is moving in the direction of modernization.

What I found most interesting, both as a conference moderator and participant, is that most are now embracing the shift from analog to digital. Nearly 30 panel presentations took place and almost every expert panel stressed the same theme -- the industry is moving past the "robo vs. human" debate, and toward a human-computer partnership.

More specifically, panelists and attendees have concluded that it is time for the industry to actively integrate emerging enterprise digital advice services to modernize their wealth management practices. Panels involving discussions between Betterment and Fidelity, for instance, as well as my firm NextCapital and Russell Investments, provided tangible examples of how to partner with digital advice platform providers.


Incumbents, or traditional institutions, have a lot to lose if they do not embrace change. Even though many are late to the game, they have the largest market opportunity. Gareth Jones, managing director of FinTech Collective, pointed out that the biggest winners ultimately will be incumbents.   

To keep pace, Schwab and Vanguard have both launched their own robo-advisory services. TD Ameritrade recently announced it will be building its own robo-offering. Large financial institutions are adapting to meet the demands of consumers, as well as pending new consumer protections, most significantly the DoL fiduciary standard.

The slice of assets under robos will only continue to grow over time -- A.T. Kearney expects the percentage of total investable assets that robo-advisory services manage will jump to 5.6% in 2020 from 0.5% today.


Making digital advice truly personalized requires harnessing the power of data. Doing so can make it as important and relevant as being “in person."

The event showcased many firms dedicated to driving more personalized client information, reporting and experience. One leader in the effort is Lowell Putnam, founder of Quovo, who has focused on delivering better account aggregation and financial analytics for the wealth management market.

Through a software platform, the firm aims to provide the ability to pull together data about clients in a way that usually is only accessible to big firms with the budget for costly IT infrastructure.

Another key insight from InVest is that it is very difficult for a fiduciary to provide good advice without understanding what a plan participant owns and knowing who they really are.  

In all areas of commerce, we are witnessing a shift in control from the institution to the individual. Personalization is everywhere; in music, news media, in social and professional networks. This applies to the financial services industry as well. Instead of the big financial monolith dictating your financial life, the power is shifting to the client -- the emerging platform is one truly built from the ground up around one simple concept: "Me."


Another trend: Investment products are becoming less and less important, while scalable advice solutions are becoming critical to the future of wealth management.

With over 8,000 mutual funds and 1,500 ETFs, the consumer doesn’t need another mutual fund product. They are part of an era that was built on the mainframe computer. Emerging technologies are establishing automated personal guidance and portfolio management at cost and scale previously impossible.

Matt Harris, managing director of Bain Capital Ventures, made a strong point during our panel discussion. If you are a wealth management firm, create a culture that allows your firm to embrace partnering with digital wealth technology providers, and get out there, start partnering, and start experimenting.  

With the rapid emergence of robo advisors, some traditional advisors have experienced an existential crisis. Like many things in the life, the debate is often binary and heated: Who will win, human or computer? This is a false choice. Worse yet, it provides advisors with little constructive guidance on how to navigate towards the practice of the future.

Advisors who truly embrace new digital advice technologies will be strongly positioned to retain existing clients, and be able to each new markets, such as the burgeoning millennial demographic.

While no one can see the future with perfect clarity, a “high tech” and “high touch” model is certain to be a winning strategy for advisors of tomorrow.   The InVest Conference stressed this point. Don’t pick sides on this debate. Pick a partner.

Rob Foregger is co-Founder of NextCapital, Personal Capital and EverBank.

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