Five Technology Trends that are Reshaping the Industry

Trend 1: Collaborative planning

By far the most entertaining T3 session featured Bob Curtis, CEO of Pie Technologies, maker of the MoneyGuidePro planning software. Curtis staged a conversation with an individual in a robot costume, identified as "RoboAdvisor," who was predictably flummoxed whenever he was asked a question that related to a client's personal goals and objectives.

But later in the presentation, Curtis noted that many advisory practices are not so different. They gather up a client's financial data, go off in a room somewhere, and a week or two later they come back with a fully-developed plan.

In the exhibit hall, MoneyGuidePro and a new competitor called InStream Solutions were demonstrating features that facilitate a more collaborative planning approach. Advisors and clients interactively enter the financial data, which, for clients, is a far more pleasant experience than digging through their account statements to fill out a questionnaire. If they want to enter the 21st century, advisors pull this data in via account-aggregation software. MoneyGuidePro announced integration with Yodlee, which can be purchased through the software provider for a discounted $495 annual price.

Then the advisor and client, side-by-side, create the plan together. Periodically, the client can take the wheel and play with the return assumptions, move the retirement date back and forth, raise or lower the amount invested each month, scale back on certain goals and add others.

The result? Clients get more face-time with their advisor. The advisor builds a closer bond earlier in the relationship. The client buys into the plan and gains a greater appreciation for the work-in-progress that is financial planning. Plus, advisors say that the plan-creation process becomes dramatically more efficient. Win-win-win-win-win.

Trend 2: Alerts

Think of all the time you currently spend checking client accounts for what needs to be done next. Why can't the software tell you when a client or portfolio needs your attention?

Now it can. MoneyGuidePro has built alerts around whether clients are still in the comfort zone of funding their goals. If the market takes a dive, you immediately see if any client goal sufficiency meters have moved from green to yellow or yellow to red.

A big part of InStream's value proposition is allowing advisors to customize whatever they want the program to proactively warn them about, be it a required minimum distribution or a local news article about the client's favorite golf course. The program constantly searches your client data and the web for whatever you specify.

A trading program called Trade Warrior, meanwhile, lets you specify tolerances for cash positions – so you are told whenever a client's cash balance won't be sufficient to meet a planned distribution or to pay quarterly advisory fees. You determine how far you will allow different asset classes to increase or decrease their percentage of client portfolios, so you're automatically alerted whenever a portfolio falls into an imbalanced state.

The software will also automatically call to your attention any tax loss harvesting opportunities that arise at any time of the year. Whenever a client is holding more than a particular dollar amount in losses in any one position, the situation is called to your attention at the end of the trading day. When you look over the recommended rebalancing options, the program shows the losses and gains embedded in each trade lot of the overall portfolio.

Suddenly, individualized tax planning is not just possible, but easy.

The same trend is finding its way into CRM programs like Redtail, Junxure and XLR8/Concenter, which remind you whenever a client has not been contacted in 30 days or is approaching the time when a meeting needs to be scheduled. In a world where your software proactively looks for increasingly detailed ways you can help your clients, your level of client service goes up while the cost of servicing your clients goes down.

Trend 3: Workflow integration

What's new about this? In the past, "workflow" meant a coordinated list of related tasks in your CRM, which together accomplished a particular service package like scheduling and preparing for a client meeting, distributing cash out of a client portfolio or onboarding a new client after the introductory meeting. These CRM-embedded workflows may have been more convenient than mapping out the pieces of a client experience on a whiteboard in the office, but they can't be described as a major breakthrough in office efficiency.

At the T3 conference, ActiFi, Redtail, MoneyGuidePro and the investment management/back office outsourcing firm SEI, Inc. announced a workflow integration that actually takes work off your plate. As Segal explained it to me, the breakthrough is automation. Instead of having to manually send data from one program to another, and then tell the software what to do next, the system knows where the data need to go and sends it. It knows the next step that needs to happen, and often will do it. So, for instance, when a new client's plan is finished, the completed document is automatically routed to the senior advisor for review. When a new client signs on, the proper forms are automatically prepopulated and printed.

But of course that means somebody has to decide beforehand what the system should be doing, and which member of your back-office team will handle the next manual task. One interesting solution, introduced by Fox Planning Network, is a powerful new middleware product called Genesis Smartware. Genesis presents you with a graphical interface that lets you define your office workflows by dragging into sequence various boxes and diamonds and circles of different colors – each shape representing a different type of task, each color telling the system what software is involved. You set up branches whenever there are if/then decisions; if the planning document needs corrections, it is routed back to the planning department. If not, a message goes out to the client and the document is automatically uploaded into the client's secure information vault.

When you've defined your workflow and assigned each task in the overall procedure to a staff member or a software program, Genesis will reach out its electronic tentacles, link together the different programs and tell them what you're asking them to do. When a workflow is initiated, Genesis will pull in the required data out using each application's automated program interface (API), translating between incompatible field definitions where necessary, and automatically call to the right staff member's attention the next step that has to be handled manually.

Perhaps the best example of a turnkey cross-program workflow – and almost certainly the first to hit the market – is Assemblage, from Trumpet, Inc. How long does it take you to produce performance statements for clients, and upload them into a client vault or print them with a cover page for snail mail delivery? Assemblage will automatically pull each client's the quarterly performance report from your portfolio tracking system, mail-merge each client's customized quarterly cover letter from your word processor, bring in your required disclosures from another document, pull in any spreadsheet graphs, print a cover page with the client's name and address so you can insert the package into an envelope with a window, and the entire report has consistent page numbers from cover letter to the last page of the disclosures.

Before Assemblage, before Genesis, before the strategic partnership, workflows were primarily a way to coordinate the activities of a largish staff. Now they're a way to have your software handle chores that you had been doing manually, and streamline the communication between your software tools.

Trend 4: Remote back offices

When United Capital Financial Advisors set up a centralized data processing office in Dallas, the goal was to take labor-intensive chores off the backs of its affiliated advisory offices around the country. Recent graduates with financial planning degrees were hired to input client data into the planning software, interact with the client to collect any missing information, and give advisors a first run of the financial plan. They would, if the advisor wanted, handle the process of scheduling the face-to-face meeting with the client.

But it wasn't long before the company realized a second advantage of this arrangement: the raw young advisors were being trained to handle increasingly sophisticated para-planner duties. Their work experience helped them evolve and become those coveted, experienced, trained professionals who could be hired into existing offices – and they were already familiar with the office's software suite.

At T3, Texas Tech University took this concept to the mainstream profession, with the introduction of the PlanTech Squad. The best description for the PlanTech concept is a combination of outsource-service provider and remote-residency program. Students will handle software data entry for advisory offices around the country, create draft reports and manage– remotely– cloud-based programs like Redtail, Laserfiche, IPS Advisor Pro, MoneyGuidePro, FinaMetrica, MacroRisk Analytics, Total Rebalance Expert and Orion's portfolio management outsource software. If you use any or all of those programs – and the list is growing – then you can access the skills and labor of students in the financial planning program. After a few stints in the PlanTech lab, those students will be trained as experienced para-planners.

This will allow students to enhance their experience level and make themselves more valuable as new hires when they graduate, and at the same time dramatically expand the outsource opportunities for advisor practices. Eric Sawyer, who oversees the program as Texas Tech's director of planning, cited the example of a firm with a younger advisor who is being groomed to start taking on clients of her own. The problem? She is doing all the data entry and financial planning work, and doesn't have the time. She'll offload some of that work onto PlanTech, move ahead in her career, and the firm will get a trial (albeit remote) look at some potential candidates for its next para-planner hire.

As more advisors access PlanTech, they will become more comfortable with having para-planners and other support staff working remotely. It's possible that some of those new hires out of the University will be working from home.

Trend 5: Automated Marketing

A company called Vestorly flew under the radar at T3, but its technology may turn out to have the most profound impact on the profession, radically upgrading the way advisors market their services. If you're currently experiencing slow organic growth or worried that the firm relies too heavily on the marketing activities of the founding advisor, then Vestorly could be a game changer.

For starters, Vestorly provides online access to articles from a variety of publications, from the New York Times and Forbes to specialty publications like Wine Spectator. It organizes them into a newsletter that you can easily customize on your website. You can encourage clients to share links of interesting articles with their friends and neighbors. These acquaintances provide their email addresses in order to get full access to the content. The system tracks what they click on, and customizes itself to their tastes and interests. And, of course, these prospects are encouraged to share with their friends and neighbors.

In other words, Vestorly automatically builds content for you, and then it automatically builds your prospect list – along the way providing you with LinkedIn and Facebook information about all of the prospects who have signed up.

In closing, I'd like to add one other observation, which is not a trend but is powerfully related to the implementation issue. A handful of the attendees at the T3 conference were operations/back-office supervisors, and they were far more sophisticated, generally younger, than the average attendee and better able to see how to fit this cornucopia of tech options into their firms.

The point? Many founding advisors actually get in the way of technology implementation, in part because they resist complicated changes that they aren't totally familiar with, in part because they don't have time to do their own evaluation and make a decision, in part because, well, they're old and set in their ways, and are likely to think that social media integration has something to do with the society column in the newspaper.

Increasingly, operations professionals are evolving their own specialized career path. They have their own study groups now, and at least one conference (the Insider's Forum meeting in September, which I co-produce) offers them their own educational track. Increasingly, founder advisors will be well-served to delegate tech decisions to these professionals.

Meanwhile, the profession needs to put the latest tech innovations into a coherent practice management context. Otherwise, an exhibit hall full of tech companies is a bewildering exercise in over-choice. In the future, the biggest practice management benefits will come from your ability to see how a new world of software capabilities fit into your firm, and build a world where somebody using 20% of a software's capabilities is not considered a power user.

Bob Veres'Inside Informationservice is the best practice management, marketing, client service resource for financial services professionals. You can sign up for Inside Information ($299 a year) and a separate Client Articles service ($298 a year) which provides three or more Bob-written blog posts a month for your website or to send out to clients: www.bobveres.com.

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