Technology Disruption is Good For Financial Advisors


It took 38 years for radio to reach 50 million users—but just 13 years for TV, four years for the internet and 35 days for Angry Birds, as a recent report on the investment management industry by KPMG [i] points out.

As technology disrupts financial services with increasing speed, investment managers who want to stay competitive need to develop robust core platforms that can be customized to increasingly diverse client needs and tap into a wider pool of data to drive investor insights and investment decisions.

Financial Advisor Technology Solutions are Essential to Growth

Many traditional firms are falling behind—and this has created an opportunity for “roboadvisors” to grow. The 11 leading roboadvisors saw their assets under management nearly double from April 2014 to July 2015, rising 83% in 15 months from $11.5 billion to $21 billion, according to a report[ii] by Corporate Insights, a firm that provides competitive intelligence to the financial services industry.

These trends have forced my firm to radically change the way we do business. A few years back, a client who has been with me for 25 years said to me, “Ron, we love you—but our kids aren’t going to work with you. They say you guys are just out of touch.”

I was floored. I had known his children since they were little. Instead of working with us, he told me, his kids had turned to a firm offering online accounts where they could get access to crucial information instantly.

When you get feedback like this, it is easy to fall into the trap of fighting back to defend what you are comfortable with instead of being open to the feedback and potentially embracing the unknown. My first instinct was to dismiss my client’s comments. Technology would never replace the human touch our firm provided, I told myself.

Big mistake. In a 2015 Gallup survey[iii] of investors with at least $10,000 invested in stocks and bonds, 71% said access to online investing tools is very or somewhat important to them. Among those 18 to 49 years old, 84% said they use digital investing tools as a source of advice, while 69% of those 50 and older said they do.


As hard as it was to admit I may be wrong, when I recounted the conversation to financial advisors at my firm and we went online to check out some of  these sophisticated reporting tools that other firms were offering, we realized the client was spot on. We concluded that the future belongs to firms that deliver maximum technology and meaningful touch. We knew we needed todo something different. If 71% of investors today find online investing tools important, how much more will that increase over time, as the technology becomes more familiar?

Now, some of you may be too young to remember this, but think of (or Google) the Lee Majors character in the 1970s hit TV series The Six Million Dollar Man. He was an engineered bionic human, combining the best of man and machine. This bionic best-of-both-worlds is a brilliant strategy when it comes to incorporating technology into the financial advice model as well. The future is in the “bionic” advisory experience, combining the best of man and machine into a superior client experience.

To deliver value beyond a doubt to our clients, we had to make sure the firm evolved. We live in a metrics-driven world. We realized clients needed to see that we are delivering value for them, not just hear us talk about it. We need to stand up to and be measured—and want to be measured. There is real value we provide through our advisory services. As Gallup’s survey found, even the youngest group of investors prefers getting financial advice mostly (42%) or exclusively (15%) from financial advisors. If forced to choose, 43% would opt for a strong relationship with a financial advisor over access to cutting-edge electronic investing tools. Nonetheless, 83% of these younger investors say digital investing tools are important to them—and advisors can’t afford to ignore that reality.


Making our firm attractive to them meant investing in cutting edge financial tools that would be very costly for one firm to create alone. To do that, I founded Carson Institutional Alliance in 2011, where we pool our resources with of a group of elite advisors, in 2011. The technology we developed now allows advisors in the alliance to prepare for a client meeting in 30 minutes, instead of spending a whole business day, and get better information. We can access research materials, updates and trade notifications from an iPad or mobile phone. Meanwhile, our reporting tools make it clear to customers in an instant how their investments are performing, offering them 24/7 access and transparency.

These clear reporting tools have put the onus on us to perform. If we are not delivering value beyond a doubt to our clients, that becomes clear very quickly. We are constantly on the lookout for weaknesses in our own services, so we can pick up on them before clients do—and fix them quickly. This might sound exhausting; it’s not. Instead of feeling worn out by the constant challenge of delivering value, we are energized by working with members of the alliance who are constantly trying to do things better so all of our firms thrive.

In the future, every industry will be disrupted. There is no doubt about that. Financial advisors need to ask themselves some tough questions: Do you want to be disrupted or the disruptor? Are you the “Uber” in your industry? If not, do you know how to become one? If you don’t figure this out, the disruptors will eventually put you out of business. To deliver value without a doubt to your clients, you must be the disruptor, not live in fear of it.

Carson Institutional Alliance has allowed us to embrace the role of disruptor with enthusiasm. We no longer have to worry that young, tech-savvy investors like my client’s children will flock to firms offering better technology, because ours are cutting edge. We are excited when clients use our reporting tools to measure our performance, because our technology keeps our team accountable. Our clients can easily judge whether we are delivering value beyond a doubt—and that has given our firm what I call the Sustainable Edge.

Advisors, what technology are your clients looking for from your firm? Do you know? Are you providing it? What questions have you been afraid to ask, for fear of what the answer might be? How are you integrating technology into your practice to deliver a superior experience to your clients? What challenges are you experiencing while making these technology changes to your business?




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