Schwab bids to become the 'Zagat' of RIA technology and to nix ink signatures from RIA life
Neesha Hathi presents the dueling intiatives as next steps in her custodian's march toward serving 7,000 advisory firms
Orion names 'left-brained' Natalie Wolfsen as CEO to replace Eric Clarke, and AssetMark, which synchronized its announcement, hires Michael Kim as her replacement
Orion Chairman Charles Goldman again lures his protege to self-replace, while Michael Kim was 'integral to AssetMark’s record financial performance over the past several years'
September 8, 2023 at 11:58 PM
Oisín's Doubletakes: Clara Shih returns to Salesforce after 11-year hiatus • Focus reloads for M&A with $500 million debt raise, taking its credit north of $1.5 billion • Goldman Sach's 2020 partners list looks less homogenous -- even 'accretive' of women
Former HearSay CEO returns to her mother corporation • Focus Financial Partners debt levels soar 50% on fresh debt issuance • Goldman adds diversity, but snubs Marcus partnerships
February 6, 2021 at 2:39 AM
Oisín's Bits: Wealthfront drops old mission statement, declares war on institutions and emphasizes banking future • Seeking Utah charter, Edward Jones may become largest bank in US by branch count • After Advent chief leaves, Black Diamond head steps up
Andy Rachleff cans the old 'democratizing' mission statement at his robo; The 14,200 one-man Ed Jones branches may become branch banks; Steve Leivent consolidates power at SS&C.
July 3, 2020 at 1:12 AM
Addepar hires Advent genius then launches 'Advent Converter' to court the RIAs still on Axys and APX ; PortfolioCenter 'easy button' comes next
The tactic by the Mountain View, Calif. firm and Advent co-founder and code avatar Steve Strand comes a decade after Orion, Black Diamond and Tamarac began feasting on the legacy corpses, but Addepar insists meat remains on the bone.
March 3, 2020 at 5:05 PM
See more related moves
Elmer Rich III
Let us take our, as usual, contrary, position on tech. “There are no tech solutions to relationship problems.”
Tech is really old news. Most of the efficiencies have been realized. It’s gotten to be a hype driven bore. Is that too harsh? lol
There is really no more space for a “game changer” in soft or hard ware. Most of the benefits will come from incremental, and very expensive, changes to legacy systems by the vendors and provider-partners, e.g. custodians. Advisors have no influence over providers tech priorities and funding.
For advisors to spend much more time or money on tech is probably a disinvestment in what will really effect their business. Living near Silicon Valley, it makes sense that Schwab would, essentially, see all problems as tech problems. They aren’t. Likely very few are anymore.
On the client facing side, the critical side for advisors, we see little that is useful — and we’re hard-core marketers! The accumulating evidence on websites and social media is that they are mainly commoditized customer service tools. From research we’re using on other projects, content — what you say — is far more effective than any tech. Sorry.
Most asset gathering, advisors main job, is done f-2-f. Tech often gets in the way of this. Or the tech advisors now have is good enough. Advisors who spend time on tech are spending time away from their core responsibilities to themselves, their families and clients. Let’s be honest.
Frederick Van Den Abbeel / TradePMR
Will be interesting to see how this develops. I think one of the best resources in this area is to attend more technology specific advisor conferences like Technology Tools for Today. Also, I would emphasize for those members that are members of the FPA to explore what work both the local chapter and the national organization have done. In my San Francisco FPA chapter, later this month through The Emerging Advisors Forum, they are hosting an Advisor led panel discussion reviewing eMoney, MoneyGuidePro, Finance Logix and others. Schwab I’m sure has the best intentions but I think most will want to obtain such data from other sources which appear to have less bias.
Elmer Rich III wrote: “Most of the efficiencies have been realized.”
According to…? If that were true, I’d be out of consulting jobs!
Elmer Rich III
OK, how much more value can be wrung from tech vs time and expense? Please provide data to support claims. As tech T&E has grown in advisor firms, where is the offsetting gain in revenue and profit?
Where are the new jumps in efficiencies and savings coming from? Cars aren’t that much more efficient then decades ago but you still need mechanics.
We also might want to get statements and experiences from people not making their living selling tech, of course.
Tech seems similar to landscaping – nice to have and attractive but – mainly ornemental. Tech consulting seems more like “gardening” now — mainly maintenance.
“With an investment in enterprise content management technology, RIAs can save anywhere from $48,000 a year in annual operational costs for a small firm to upwards of $360,000 for a large firm.
This increase in profitability can result in an increased business valuation of $242,000 for a small
firm or $3,616,000 for a large firm.” – Laserfiche ROI for RIAs, November 2011
Percentage of financial advisors using document management software: 30%
.- 2011 Financial Planning Magazine Technology Survey, December 2011
70% of financial advisors are still using horse-drawn carriages.
Thank you, Bill.
And yes, I’m still shoveling some manure.
There you go again. Technology is just ornamentation????
As human beings we can only phatom the three dimensional. If we try to think interms of the fifth or tenth dimension we can not handle 25 or 100 inter-related outcomes. It is beyond the human capacity to reason.
Let’s say you 500 clients and want to manage just six values, say risk, return, tax efficiency, liquidity, cost and time—all required for the client’s success and inherint in fiduciary duty. Let’s assume you were to use just 10,000 investment alternatives at your disposal, could be 50,000, each having at least 100 description points, inorder for you to add value and fulfill you fiduciary duties very narrowily described here, you would have to manage a 3 billion dimensional equation with nine quintillion possible outcomes in real time. This is clearily beyond human comprehension, modern processes and technology are needed and they importantly exist, so the continuous comprehensive counsel required for fiduciary standing is possibe.
You simply can’t do all this in your head for even one client. There are several calculations for things like risk and return with are not particularily daunting unless you have to do it in real time for 500 clients.
You won’t like this but with the free flow of data supported by the SEC (XBRL) on the horizon is an unlimited number of apps that help advisors and consumers make informed decisions that seem like rocket science to folks such as yourself. Of course, you have to understand modern finance like MPT to be adept in their use, which I am sure drives you crazy since you believe in chaos, every body has an oppinion (including Markowtiz according to you) and no opinion is better than another.
Again your assertions are absurd.
I have sworn I would never again respond to your outrageous assertions, but this was so egregious—it could no go uncontested.
Fortunately for you and RIABiz, I have consulting services! ;-) [said with my tongue in my cheek]
Bruckenstein is very insightful in offering that brokers do not know what they want or how to use what they have and certainly do not understand what is possible.
When the old Prudential Securities asked its PMers (run by Greg Phepps and then Tom Roginski—both former business partners of mine) what they needed, to their chagrin they found in proving exactly what the PMers wanted, that that was not what the PMers ment. This interpetation problem between the practitioner, service provider and the technologist is not uncommon. That is why we have to go back not to the user but to what is statutorily required in rendering advice.
This is where leadership comes in, which is why Schwab’s technology move is so disappointing. There needs to be an advisory services technological solution based on solid objectiv, non-negotiable fiduciary criteria (statute, case law, regulatory opinion letters) that works.
Schwab’s limitation is the same as the brokerage industry’s—it does not want to be prescriptive as it incurrs fiduciary liability—which presently resides with the advisor, if advice is acknowkedged as being rendered. So, what does the advisor do? Were is the leadership?
Vendors must create elements of an expert authenticated prudent investment process, based on objective, non-negotiable fiduciary criteria, for which expert opinion letters can be obtained that confirm these narrow elements of an authenticated prudent investment process ( the asset/liability study, investment policy, portfolio construction, monitoring and management functions) can be affirmed for each of the ten major market segments advisors serve.By only adressing one of these functions, the vendor’s expert counsel do not have to opine as to full fiduciary standing—just their small contribution. Importantly, the focusof Schwab and the brokerage industry is then on the enhancing the skill of the practitioner, not on the nonscense of asserting no advice is rendered counter to the best interest of the investing public.
Don’t try to reason with Elmer, you are just feeding his ego. I am ignoring his indefensable outrageous statements.
Elmer Rich III wrote: “Tech is old news. Most of the efficiencies have been realized.” Really?
This reminds of when Charles H. Duell, Commissioner of US patent office in 1899 said “everything that can be invented has been invented.”
Elmer Rich III
So are the commentators saying we don’t need to think hard and critically about tech? Or engage in personal attacks to avoid the hard questions?
“Strong minds discuss ideas, weak minds people.”
With all the tech gurus we have in the advisory world some should be able to engage in principled, not personal, fact finding and discussion. Maybe not.
Let’s look at the data cited above. Are we to take this at face value? Any of the numbers? Of course, from a fiduciary perspective tech companies are big advertisers of industry journalism so is that arm’s length? Is that unfair to consider?
Do we buy the whole “tech as advisor salvation” story? Or what other views experiences have advisors had? Be brave. If anyone personally attacks you, Brooke will delete their attacks. Maybe not. lol
People are allowed to ask questions that get under people’s skin without my deletion as long as it’s somewhere north of mean and slanderous.
I don’t entirely agree with some of your premises — like that the RIA business is swimming in tech consultants. Really, there are a pretty small handful I know of who can call it their day job.
And most of the technology companies are still too small to do much meaningful advertising that would buy reviewers off. When was the last time you saw a tech provider do a big ad spend?
Whether advisors are getting a fair return on all technology spending — depends for sure, perhaps on the quality of their consultant and the discipline of the advisor to use the tech right, and whether they read a review carefully to get the right match.
Elmer Rich III
Personal attacks are the standard human brain response to new ideas and ideas and questions that feel like they challenge a person’s personal status quo and beliefs. It’s usually the first defensive-fear reaction. Get afraid – attack.
That’s expected but unprofessional and unhealthy for any open forum and discussion and just derails meaningful learning and sharing — the goal of the personal attackers. It also scares of quieter voices that might contribute
The simple observation is that there is no simple or mechanical (and tech is just mechanical) solution to the substantial and growing business problems and challenges of advisors — contrary to sales claims. But the mechanics are a lot easier to talk about than hard matters of organization, people, business process and business strategies and — the most significant – market dynamics. Fair enough.
Let’s take a simple example. How much does the smartphone and it’s apps that you use to connect with clients really matter in your relationship and business dealings? I don’t know, but it’s a useful question.
Plus, we have to be honest and say we have all seen advisors somewhat chasing their tails around tech. They invest to solve problems and more problems come up, demanding more investment. Counter parties, clients and providers lag advisors tech so there is a mismatch. Legacy systems are a drag on everyone. Patching with middleware creates more complexity
Thanks for the clarification of commercial matters.
Finally, we all want to believe there are straightforward tech solutions that are “set and forget” there probably aren’t. Tech adds complexity and expense. Whether there is a return is a standard business and professional question.
This kind of back and forth is what’s needed. As professionals we are dedicated to and paid to ask the tough questions.
The commentators here are all about ideas. That is why we even care to respond. You have yet to make one cogent point that you can defend. So far you have made no points other than to disparage the basis of modern finance, fiduciary standing and the importance of technology. The false sense of intellectual superiority you apparently seek can not be gained by the denigration of proven and self evident financial theory, fiduciary standards or technology which are not executed well in delivering value to the consumer. You need to either establish why they are not executed well to make a point, or to reinvent modern finance, which is not likely.
The reason best thinking is not executed is the fear of fiduciary liability has resulted in the industry refusing to acknowledge that any advice is rendered thus mitigating liability. The unintended consequence of this decision of 40 years ago is it precludes the necessary enabling resources essential to support expert advice and fiduciary standing. Therefor today’s painfully obvious deficite in advisory services resources, training and execution which has caused a corrective Act of Congress—Dodd-Frank..
There is absolutely no value being derived from your constant inane barrage of negativity denigrating the industry without offering positive solutions/insight.
I swear this is the last time I will respond to you, likely to last until your next outrageous comment.
I just cannot resist and sorry for the cut-n-paste but Elmer’s many assertions require a structured approach.
[Elmer Suggested] “Tech is really old news. Most of the efficiencies have been realized…”
Have you considered the impact VOIP, Nano-tech, etc., has on your firm, life..?
[Elmer Suggested] “There is really no more space for a “game changer” in soft or hardware.”
Intel employed 22 nanometer technologies in their latest chipset which is smaller than the Human Rhinovirus aka the common cold virus. The smallest strand of human hair is near 17,000 nanometers. 25 years ago transistor technology stood at 5000 nanometers. Not sure why you believe there is no more room…
[Elmer Suggested] “Most of the benefits will come from incremental… changes to legacy systems by… custodians.”
Unfortunately some of what you assert is true due in part to arcane technology, lack of technology standards specific to the industry and so forth.
[Elmer Suggested] “Advisors have no influence over providers’ tech priorities and funding.”
No significant or organized advisor lobby for the improvement and advancement of technology exists in this industry.
[Elmer Suggested] “For advisors to spend much more time or money on tech is probably a disinvestment…”
This depends as much on the advisor as it does on technology. For example less than 20% of advisors have invested in a commercial trade management tools. Yet these tools have proven to provide efficiency gains greater than 500%. Advisors tend to chase after the non-existing proverbial silver bullet. If silver bullets did exist, technology in general would be dead. It is a self-fulfilling eventuality as technology advances.
[Elmer Suggested] “...it makes sense that Schwab would, essentially, see all problems as tech problems.”
I think that you misread what Schwab’s position on tech is. If you statement were true that require TD to move to Silicon Valley as well. Generally speaking the buy-side of this industry is a technology laggard and to their credit they are trying to fix some of that.
[Elmer Suggested] “On the client facing side, the critical side for advisors, we see little that is useful…”
CRM, Internet social networking, etc., are tools, and when used correctly – you reap the benefits. However use them incorrectly – face the grim reaper. Nothing has changed; it is up to you to use the marketing tools in vogue to advance your cause.
[Elmer Suggested] “Advisors who spend time on tech are spending time away from their core responsibilities to themselves, their families and clients.”
Improperly implemented – you bet. Properly chosen and deployed technology continues to prove itself as a real time-saver.
[Elmer Suggested] “We also might want to get statements and experiences from people not making their living selling tech, of course.”
Sorry, guilty as charged. 30 years of hardware and software technology corruption at work here.-)
[Elmer Suggested] “Tech seems similar to landscaping – nice to have and attractive but – mainly ornamental. Tech consulting seems more like “gardening” now — mainly maintenance.”
If you really believe that then I challenge you to discard your landscaping for desert and trade your gardener for Gunga Din.
[Elmer Suggested] “Plus, we have to be honest and say we have all seen advisors somewhat chasing their tails around tech. They invest to solve problems and more problems come up, demanding more investment. Counter parties, clients and providers lag advisors tech so there is a mismatch. Legacy systems are a drag on everyone. Patching with middleware creates more complexity…”
If your technology systems are dated or improperly implemented this is a side effect of someone doing their job correctly. On the other hand you may have invested poorly or hired a technology consultant that should find a new career.
This is kind of fun to read, and may make a good column with minor retrofitting.
Elmer Rich III
Methinks he does protest too much. Because of the hype and hope tech is never held to standard business case analysis. It has become the “money-pit” of advisor’s businesses. Something tech sellers are glad to enable.
If tech wants to mature as an industry and especially in it’s usage by critical professions like the advisory world — it needs to move well beyond hyper-caffeinated claims of people selling it.
We find this claim over and over – the underlying ideas and solutions are sound but the people executing it are dumb/wrong/inept/etc. That is a dishonest and false argument. If normal, over busy folks can’t implement something — it’s a solution or service with no value.
The leqd statement: “Rhinovirus aka the common cold virus….” is a good example of the kind of “gee whiz” attitude that pervades tech. It’s silly. “Jet packs for everyone.”
Advisor’s and client’s tech needs are not that complicated. They need it to do basic things. They need to see a return and not an endless stream of costs and work.
They certainly don’t need anything the size of a virus! lol
Here we go again…
[Elmer Asserts] “Methinks he does protest too much.”
Elmer I think the only one protesting here is you. You have been presented with facts that you seem to conveniently overlook while presenting what amounts to your own dogma.
[Elmer Asserts] “...the hype and hope tech is never held to standard business case analysis.”
Once again that depends on your vendor. Perhaps you subscribe to baby and bathwater, however making an unfortunate technology choice does not damn all other solutions.
[Elmer Asserts] “If tech wants to mature as an industry and especially in its usage by critical professions like the advisory world — it needs to move well beyond hyper-caffeinated claims of people selling it.”
This is baseless and could easily have been written by Occupy to state: “If investment advisory wants to mature as an industry and especially in its trust by John Q. Public — it needs to move well beyond hyper-caffeinated claims of people selling it.” An equally baseless assertion and certainly not something any of us here subscribe to on either point.
[Elmer Asserts] “We find this claim over and over – the underlying ideas and solutions are sound but the people executing it are dumb/wrong/inept/etc. That is a dishonest and false argument.”
Personally I have never heard anything like what you have quoted. If advisors were “dumb/inept/” then they wouldn’t be in business. I left out “wrong” because anyone can be wrong. Bottom line is that many of the best technology tools available to the advisory world are due in large part to advisor input.
[Elmer Asserts] “If normal, over busy folks can’t implement something — it’s a solution or service with no value.”
So what you are saying is “If I am too busy to properly implement a technology solution then it’s not worth anything. Technology should be smart enough to just do what I need.” Isn’t that like reaching for a “jetpack”? I will agree that technology generally speaking has not provided adequate means to enable rapid integration and implementation – that is beginning to change quickly.
[Elmer Asserts] “The lead statement: “Rhinovirus aka the common cold virus….” is a good example of the kind of “gee whiz” attitude that pervades tech. It’s silly. “Jet packs for everyone.”
I repeat, this technology is currently available to you as a desktop computer, this is not science fiction, it is science fact. Without these advances your iphone, ipad, phablet, blackberry, etc., etc., would not exist. Besides I traded my jetpack in for an Iron Man suit months ago;)
[Elmer Asserts] “Advisor’s and client’s tech needs are not that complicated. They need it to do basic things. They need to see a return and not an endless stream of costs and work.
I think your underestimation of the complexities of what various firms deal with is naïve at best. If it were so “basic” then there would be no need to go beyond Outlook, Excel and perhaps Access. Perhaps you are mistaking ease-of-use for “not that complicated”.
In closing one can only wonder what bad experiences you have had to cause you to have such a negative outlook on technology. I would be happy to introduce you to firms that have $100’s of millions AUM with 1 staff member and partners thanks to properly chosen and implemented technology and I am not speaking in reference to HNW firms with just a few accounts. Feel free to contact me directly via email@example.com if you wish to learn more.
Frederick Van Den Abbeel / TradePMR
I believe many years’ ago sophisticated technology was so out of reach from the traditional RIA, either unduly expensive or required so many logistics it just wasn’t feasible. I’m thrilled that in today’s environment, the smaller RIAs can have access to the same tools that at one point were only available to super large institutions.
I commend all of the custodians and technology vendors who work to make their tools robust and available (and much more affordable). I think we all benefit when the $50mm RIA firm now has access to the same sophistication that at one point were only possible in the billion dollar firms.
We still have more work to do but think we are headed in the right direction. This is coming from someone who used to do financial plan analysis by hand!
I hope everyone has a wonderful Thanksgiving.
Elmer Rich III
Our experience with tech is that it is grossly oversold, under-delivered and of minimal value to RIA’s but steady a drain on resources and a major distraction.
The tech about hype in the US is a flood of silly claims and childish promises – with all the breathless naiveté of a teenage boy. Driven by the massive money of tech investment firms and the greater fool activities of the IPO markets — let’s get real.
Tools are just tools whether they are hammers, staplers or computers. Who has seen a big jump in income from any tech installation? Of course, they have all come with massive investments of time and money from advisors — and advisor partners.
We have worked in the 401k industry for decades and seen the same tech fantasies go sour. Best for advisors to act the adult in the tech conversations and be very skeptical.
This is a dishonest slam at advisors –
“If your technology systems are dated or improperly implemented this is a side effect of someone doing their job (in)correctly. On the other hand you may have invested poorly or hired a technology consultant that should find a new career.”
The tech doesn’t work (again) so gee – Spitbrook blames inept clients. That’s unprincipled.
If anyone doesn’t know what the heck they are doing it’s the tech developers and sellers. And that’s fine. This is all new and we expect it to be full of mistakes. What is not OK is selling it as any sort of solution when it’s just early prototypes.
Basically, tech companies are asking advisors to test their early versions. That’s wrong.
We’ll forgo calling anyone to just get another hype-filled sales pitch. lol
Show us the data.
Your vast experience and data have enlightened, I have learned a great deal. One minor correction. You misquoted me as blaming advisors. We only blame inept tech or tech consultants, never advisors.
Elmer Rich III
We are merely one voice.
Blaming anyone is a false strategy for business problems — there is good research on this being a mistake – but pervasive and the first response. Of course, similar research says individuals and groups rarely contribute to success either.
Here is our point. It’s about stewardship. How are the limited resources of a business allocated to benefit the most stakeholders? These are fact-based issues, usually. Do measurable events yield more than they consume. One good thing about tech is everything is measurable. Inputs and outputs.
Our current experience is that the stewardship implications and results of all this tech are way out of whack — with sales of the latest and greatest “shiny new object” the priority and what is taking up all the media space. That’s pretty normal.
But our stewardship responsibilities require we step back, think critically and look at all the evidence. Stewardship requires we always ask ourselves the hard questions.
By definition, no one likes the hard questions. That’s why they are hard.
But a stewardship business approach has turned out to be the most reality based and thus crete the most value for the most people – longer-term. Short-term, there is always rent-seeking and hyperbolic discounting.
Tech and other vendors and providers are not stewards of their client’s businesses. Neither is the media. They present options to support stewardship – maybe.
But questions about the stewardship implications and potential for any service, solution and product are pretty much required.
BTW, our definition of stewardship includes maximizing the value of the business — for everyone.
I noticed that your firm provides marketing expertise. I wonder, has your firm ever consulted for Expedia?
Elmer Rich III