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Schwab IMPACT report: 5 key trends in wealth management tech

Customization is not a fad, and why RIAs should seek expert support.

According to a panel of third-party tech leaders at Schwab Advisor Service's annual IMPACT conference, the evolution of wealth management technology is now spread across five key trends, all linked to the advanced use of data and digital-first tools.

IMG_0334For advisory firms investing in technology, two of these trends will be familiar: client expectations that advisors should now be equipped to see their total wealth picture when building a portfolio; and the increasing demand to accommodate multi-generational investing needs.

But when it comes to the other three trends – tailoring portfolios to support specific goals, using data intelligence to optimize and grow RIA practices, or embracing and utilizing digital assets – advisory firms can learn and do more.

“Advisors should understand much of the innovation happening now, such as direct indexing, is just improving existing services,” Patrick O’Shaughnessy, CEO of O’Shaughnessy Asset Management, said during a panel session.

IMG_0328“It's delivering old stuff in much faster, lighter, easier ways that make advisors a lot more powerful,” O’Shaughnessy said.

The quick rise of direct indexing, he added, shows customization in wealth management as a concept is expanding to improve the delivery of client service. “Customization is here to stay; it’s not a fad,” he said.

“The challenge of providing advice is that it is becoming more diverse in terms of service offerings, products and client needs,” noted Sandy Kaul, senior vice president at Franklin Templeton.  

“We have new generational wealth transfers happening earlier,” Kaul noted. “You've got someone who's been on a traditional glide path suddenly getting a large influx of wealth and you need to understand how to incorporate that and change their plan. Or you have the new generation of investors looking for new types of assets, like digital assets, and they're looking for a much more digital wealth management experience.”

“As the industry innovates, the end client will continue to push it to stay focused on core advice needs,” added AdvisorEngine CEO Rich Cancro.

That’s why advisors should now add tools that bring them closer to their clients, Cancro said, and put their data at the center of the practice.

“You shouldn't [need to] ask, ‘Is this data in my CRM? Is it in my portfolio management system? Is it in my trading system?’ There is data; there is an engine and an experience. You shouldn’t care where the data is, as it should be available, fueling the experience for both the advisor and the client,” Cancro said.

Cancro added that advisors should also focus on improving their marketing, especially in a market where the client is increasingly digital-first.

“What advisors should not be spending time or resources on,” Cancro said, “is trying to build their own technology.”

"Unless you have a significant amount of capital to invest, there's no way that most advisors can keep up, even just for the security demands of technology by themselves,” Cancro said. “Every year, we conduct penetration tests and perform upgrades of all our tools just to keep them secure.”


A final word of advice came from O’Shaughnessy about building a culture of technology at a firm where most advisors aren’t digital natives.

“They and their clients are using all sorts of technology platform services that they take for granted, such as Netflix and Spotify, because they're incredibly simple, great tools that deliver something they want,” he said.

“Show them what's possible through straightforward, elegant interfaces, just like they're used to in their consumer lives and make the point clear that this is no different.”

Schwab Advisor Services serves nearly 15,000 independent investment advisors by providing custody, trading and other support services. The above-mentioned firms and individuals are not affiliated with Schwab.

This blog is sponsored by AdvisorEngine Inc. The information, data and opinions in this commentary are as of the publication date, unless otherwise noted, and subject to change. This material is provided for informational purposes only and should not be considered a recommendation to use AdvisorEngine or deemed to be a specific offer to sell or provide, or a specific invitation to apply for, any financial product, instrument or service that may be mentioned. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor. Opinions and forecasts discussed are those of the author, do not necessarily reflect the views of AdvisorEngine and are subject to change without notice. AdvisorEngine makes no representations as to the accuracy, completeness and validity of any statements made and will not be liable for any errors, omissions or representations. As a technology company, AdvisorEngine provides access to award-winning tools and will be compensated for providing such access. AdvisorEngine does not provide broker-dealer, custodian, investment advice or related investment services.

Suleman Din

Suleman Din

Suleman Din is AdvisorEngine's Advisor Intelligence Lead. Previously he oversaw technology coverage for American Banker and Financial Planning. At Financial Planning, Din launched ReinventWealth, the first newsletter dedicated to covering the evolution of digital wealth management and helped establish its INVEST conference. Previously, Din was a contributing editor to Knowledge@Wharton, the online business journal of the Wharton School of Business, and reported for the Newark Star-Ledger, where his coverage of the Asian tsunami in 2004 earned him a finalist nod for the Livingston Awards.


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