What’s Left after Financial Technology?  The Advice.

Posted by Philip Kessler, JD on 9/28/18 8:45 AM
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There are always businesses that are ahead of their time in their thinking, their technology, and the way they see the future of business. Now more than ever, investment managers that embrace new technologies will position themselves and their clients ahead of the crowd. This is particularly true if the lack of technology results in keeping information from investors.

We see tremendous opportunity in the use of financial technology and believe it is a gateway to transparency for clients and us. The old model of doing business in financial services is to keep clients in the dark, to make them believe that there is some secret sauce wrapped up in a cloak of opaqueness about their investments. We’re here to tell you that there is no secret sauce as technology has made investment management more efficient when combined with financial advice.

Financial advice

Take asset allocation, for example. It used to be that an investment manager needed to hire a bunch of analysts to monitor the monthly returns of mutual funds and then string together a basket of 14-20 funds together based upon the investor’s risk tolerance. Guess what? Technology can not only do that job, but also probably do it better because it can monitor more funds simultaneously and consider more inputs.

We, therefore, think that asset allocation isn’t what you should pay for, because financial technology can do it more efficiently than humans. Here are some other ways we use technology for our clients:

  • Account Access: our clients have the same digital experience for their investment portfolio that they do with anything else, whether that is Netflix, Amazon, or Facebook. Delivery of information is available via mobile app, tablet, or desktop.
  • Portfolio Management: automated rebalancing, tax-loss harvesting, and client on-boarding is key because each client has different needs, so customization for the client is essential to their success.
  • Asset Management: our models help us create portfolios based on the individual client’s needs. As appropriate, we can also deploy our proprietary Dynamic Growth Opportunity strategy within client portfolios, which allows us to assert more control over a client's investments.
  • Financial Planning: with our technology platform, we can efficiently serve new client segments or smaller existing clients that may fall below their account minimums- without compromising quality or client service.

When technology allows for the integration of all client data, then risk management, fund performance, and portfolio information are in sync. We think this can improve client outcomes. Still, what’s left after automation? The advice.

We believe you should pay for the advice and nothing more. Technology allows for that.

Topics: Asset Management, Financial Planning

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