Wealth management’s technology tipping point

Wealth Management’s Technology Tipping Point Jonathan Bentley The use of technology in delivering wealth management advice may have finally hit a tipping point. This is due to the convergence of three critical factors. The first factor is growing momentum in the shift to cloud delivered applications. The second factor is the generational passing in assets to boomers who are fully tech friendly, and who see elements of self-service as an asset rather than an inconvenience. The third factor is the capability of effectively designed cloudbased platforms, like InvestCloud, to dramatically simplify and accelerate the creation of fit-to-purpose custom applets. This capability opens the door for more and more manual processes to be integrated and adapted to cloud delivery. This convergence is tipping the competitive balance toward more progressive firms and younger advisors in a way that will fundamentally change the industry.

Industry Evidence Evidence of these changes can be seen from the large wire-houses and independent RIA’s to banks, mutual funds, and the regulatory agencies. Firms are now required to have a higher level of transparency than ever, transparency that can only be accomplished through cloud delivery. Adding to that are new ways to automate client involvement in decision making (ie. Robo Advisor).

External reference points that corroborate these changes include Fidelity’s 2013 RIA benchmarking study which indicated that 77% of higher performing advisory firms use technology specifically to enhance their client experience. In addition, Schwab’s independent advisor outlook study conducted last year found that 56% of advisors believe that adding automated investment management to their service delivery could help them grow more efficiently. Furthermore, another indirect source is a joint study last year by McKinsey and the World Economic Forum indicating that 80% of global banking IT executives believe Cyber-Security will have major strategic implications for their firms during the next few years.

This concern implies that more and more of their transactions and reporting will be done through cloud-based technology.

Our View From the Cloud At InvestCloud, evidence of this inflection point can be seen in the growth of custom applets that clients continue to build on our platform. We currently have over 150 applets, up from just a handful since 2010 when we first launched the platform. Another confirmation we have seen is the growing number of custom screen views that our clients have created. We now have over 3000 screen views which is a 32% increase from last year. Both of these data points support our belief that once you make cloud applications easy to create, customize, and integrate-which is what we have done with our Programs Writing Programs

(PWP®) approach, firms will find a growing number of workflows and processes that can be redesigned from manual to digital cloud delivery.

Lastly, a more concrete indication is the significant growth in demand we have seen this last year by clients wanting to use our platform to create applet consoles and dashboards that consolidate all of their various cloud applications into a single “meta” app to eliminate multiple logins and site destinations. These consoles allow a firm to have access from a single login to CRM, client reporting, document management, portfolio management and key performance metrics for the firm. Our clients are telling us that these offerings are key in staying ahead of their slower adopting competitor as well as in attracting successful younger advisors. This last point is not insignificant considering that within the next five years, half of the workforce will be millennials and they are not likely to joins firms that are still stuck on the old paradigm.

No Longer Optional Embracing these changes in no longer optional for firms which intend to remain competitive. As mentioned above, the intergenerational asset shift to the baby boomers is making them mandatory. Research into boomer’s technology use shows that they prefer the convenience of cloud-based communications just as much as the millennials that will follow them. This means that advisors need to adopt this new paradigm to remain relevant to the clients and prospects that are moving to center stage. Cloud-based applications and desktops are laying the ground for new ways of operating, and increased firm efficiency that were not previously available and that clients actually prefer.

It is important to note that in addition to attracting and retaining the next generation clients, adopting the cloud technology paradigm can also bring cost savings. Firms that do this effectively not only improve their client experience, but they are also able to manage more relationships without having to add staff.

These cost savings also come from giving up the costs of keeping a local infrastructure up-to-date along with the costs of managing security, mobility, business continuity and disaster recovery. All of these costs taken together can far exceed the costs of moving to a cloud-based platform like InvestCloud.

Focusing on the Value Add While the adoption of these new approaches do require real effort and new ways of thinking what is important is to focus on how they can add real cost and time efficiency. Firms adopting cloud technologies benefit from greater productivity, better client experience, and reduced expense and complexity. Being able to access files and information from anywhere at anytime along with being able to just as flexibly connect with and share that information with clients means that advisors can turn their entire focus to developing clients and growing their business. This is the unique high value-add that technology can facilitate, but

cannot replace.

If you would like more information about how InvestCloud’s comprehensive cloud platform and deep industry experience can simplify your move to full cloud adoption, contact us at 888-800-0188 or visit us at www.investcloud.com.

Jonathan Bentley leads InvestCloud’s content development and management division. From helping advisors better craft and deliver their stories to curating customized advisor RSS site feeds, Jonathan’s team is critical to InvestCloud’s bespoke design and site management services. Jonathan was previously founder and CEO of LightPort Inc., which merged, with InvestCloud in 2013.

Previously a practicing RIA, Jonathan was involved in developing web portals for more than 500 advisors and money managers while working at LightPort.