“With digital advice becoming a viable option to serve smaller accounts, advisors in Independent Financial Partners’ (IFP) network asked for the ability to offer the option,” says Chris Hamm, its chief operating officer.
There were many technology choices, but AdvisorEngine’s platform provided the broker-dealer and registered investment adviser unique capabilities that would benefit the over 240 financial professionals in its country-wide network, Hamm added.
In the following interview, Hamm explains IFP’s decision to embrace digital wealth management technology and why other RIAs need to do the same. Hamm also outlines the lessons learned from his firm’s rollout of the technology.
The following transcript has been edited for clarity.
For IFP, why was it important to bring a digital wealth platform to your advisors?
We always want to provide our advisors with the best platforms they need to service their clients. One of those platforms, as you know, is a “robo” or digital wealth management technology, which can help manage certain types of advisory accounts. Our advisors had been inquiring about a “robo” platform for a while, so that was one reason for partnering with AdvisorEngine.
We also selected AdvisorEngine because it allows us to provide a small account solution for our advisors and clients. As much as the technology is suitable for any account size, it is especially efficient for smaller accounts. It allows clients with maybe a smaller amount of assets to access our models and a more sophisticated level of money management tools that perhaps they wouldn't otherwise receive.
What was included in the requests you received from advisors?
The term “robo” has grown in popularity over the past 10 years. Many advisors will read an article and ask about it, and they just want to make sure they have a solution in their toolkit. The AdvisorEngine platform is a logical choice for us because of our specific structure. We have all independent advisors who own their businesses. Their ability to white label AdvisorEngine’s portal, so it looks like their brand to their clients was essential. Not a lot of the other solutions offer that ability as easily as AdvisorEngine does.
Why is it important to be able to serve that smaller client?
If you're not focused on how you’re getting to the next generation of clients, then your business will find it very difficult to survive. AdvisorEngine is a mechanism that allows you to service entry-level accounts. That level of a client can come in, and because the process is automated, receive similar service that you provide to your higher net worth clients. And if you're taking care of a client’s assets when they are smaller through technology like AdvisorEngine, then you’re likely going to be the choice to take care of them as they earn more and need more complex advice.
Does it give an advisor a way to appeal to young investors in investing apps?
Sure, when all those meme stocks were going up and down, you probably had many people who felt these purely algorithmic platforms can be scary. I’m sure you probably had people who were thinking, ‘Man, I wish I still had a human that I could consult with.’ So if I’m an advisor, I can say to a young person, ‘Look, I can provide you with the digital experience and the automation of these apps, but you still have access to human advice through the AdvisorEngine technology and me.’ It’s almost like a cyborg if you will. I think that’s a great middle-ground to be able to explain to someone.
What are the lessons your firm learned in bringing in this platform that you can share?
We had a project manager and a number of our compliance staff involved in this effort. If I were going to consult with another firm, I would say this is a platform where accounts are going to come in and need to be approved and supervised just like anything else. So there are lots of workflows and processes required to make sure that your supervisory and compliance team can manage these things. If and when possible, these accounts should come into a queue that already exists, versus providing just another queue for your staff to have to learn how to wade through.
Also, be careful in what you advertise in terms of rolling things out. You need to be generous with your game plan and layout steps for implementation. Don’t advertise that something might be available sooner than it should be. That’s because there's always going to be some testing that goes wrong that you're going to need to fix. And remember, you're dealing not only with the technology provider but with any custodians or clearing firms that you have to integrate with too. When you're dealing with big companies like that, it can add time to any project.
Additionally, we've done more training and communication with this rollout than we have with any technology prior because we learned from various tech implementations we've done. I just think over-communicating and making more sessions available than not is the way to go. If you’re exhausted from communicating, then you’ve probably done an excellent job. Advisors can get very distracted by their business demands, so you have to give them lots of different and quick opportunities to learn.
