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The digital disruption of the wealth management industry

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Overview

The wealth management industry is lagging behind in terms of technology adoption. What does the future of the wealth management industry look like? April Rudin of The Rudin Group and Steve Dunlap of Stratym Strategic Consulting discuss industry trends and how financial advisors can take advantage of the digital disruption that the industry is currently facing.

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Transcript

0:06 hi I'm April rude and founder of the route in Group A wealth marketing firm 0:11 and I'm excited to be here at IBM 0:14 15 0:15 and Las Vegas and I'm here today with Steve dunlap who's the founder of 0:20 stratum consulting and wealth management consulting firm that specializes in 0:24 solutions fourth in tact and works of wealth management firms so welcome steve 0:28 thanks april scott great to be here 0:30 great conference and having a good time ya at this is a wonderful conference and 0:35 if you want to follow the conference you can follow along with the hashtag IBM 0:39 insight so Steve I attended your session today of course of Management I mean 0:45 what's up with wealth management 0:47 why why do they wear this virtual airline industry that the wake-up call 0:52 you know it it's it's hard to say but the there are all these digital 0:58 technologies and industries out there talking about robo advisors which i 1:01 think is a hopelessly narrow constructs 222 the real issue it's not about a robo 1:05 visors gonna take our business it's about is this industry going to figure 1:09 out how to deploy these new technologies these new analytical capabilities to 1:12 improve the level of service and the quality of the customer experience that 1:16 we deliver to our own customers as far as why they're lagging perhaps it's the 1:22 age of their customers perhaps it's the historical profitability of the industry 1:27 gives them a little bit of luxury I i dont have a pat answer for that one 1:31 causal effect that the average age of advisers 55 and so maybe they're 1:37 thinking about retiring and nothing about reformatting their practice and so 1:41 how do you think that plays into this equation Steve that's a great point I 1:44 i've talked to numerous advisers over the years that they've actually express 1:47 the thought is say you know hey I'm close to retirement a few years away I 1:51 don't need to worry about this stuff I like the next guys worry about that 1:54 there are numerous advisers that are setting up new websites you are 2:00 deploying these new technologies 2:03 giving our customers the ability to interact with them on mobile devices so 2:06 they're out there but it's it's by far not the majority I think that's 2:10 absolutely true but I find that advisers do employ these technologies in their 2:14 personal life but they have a hard time carrying that over to their professional 2:17 life what would you say about that Steve yeah that that's the guy that's using 2:22 humor to get around town but yet 2:24 his clients can access information on the phone you know someone that is is 2:29 that you know that guy to exactly where we had lunch yesterday but you know some 2:35 of that is is the fact that the financial institutions are our little 2:39 behind its ultimately the financial institution with which their affiliated 2:43 over their custody where there is a need that technology from so that's part of 2:48 it and part of it is just the slower adoption curve you know on average be 2:54 cut because of the age it it certainly it's not it's not true to say that 3:00 people are in their fifties and sixties just don't use this technology but it's 3:04 not a majority I think that's true and it is not true of everyone so we're here 3:09 at IBM insight and a big focus of this conference obviously is on predictive 3:13 analytics and Watson how can predictive analytics be used while management to 3:18 help speed along areas like compliance for example yeah compliance is it is a 3:22 great example customer insight another one will come back to bite compliance 3:26 think about it most most advisers think of compliance is something that's 3:29 burdensome intrusive and if you use technology and you use analytics to to 3:35 be able to do gain insights into the way that they're managing their portfolios 3:40 the way they're interacting with their customers you can actually positioned 3:43 compliance improvements as a service for the advisers so just as an example if 3:49 you were able to use that technology to scan all of the portfolios are managing 3:55 for their customers you can identify portfolios that are laggards or that 3:59 potentially are positioned properly towards their client's risk tolerance 4:03 and go back and flag that to the advisor and help them provide a better level of 4:07 service while at the same time we've improved compliance so you get a two for 4:10 one there I create a man in my own practices in my own marketing practice I 4:15 find that I continually remind advisors and and from sudden enterprise-level the 4:20 technology is actually a revenue generator and not an expensive item what 4:24 you have to say about that Steve absolutely let's go back to the customer 4:27 insight idea so today the industry recommends very specific recommendations 4:32 for customers how they got to invest their money how they got to do their 4:35 financial plans 4:36 based on too often not enough information and if you use customer 4:41 insight analytics to gather data from multiple different places potentially 4:44 even including more esoteric things like like social media poll all of that in 4:49 combine it with information you already have combined it with Mark information 4:52 combine it with news with the right analytics you can determine what sorts 4:56 of information are relevant to that customer at that time and that's what 5:01 matters is not throwing a bunch of information out there but find it 5:03 finding out what they need to know about that's relevant to them and when they 5:06 need to know what giving that information to them at that time 5:10 another area that's a personal interest to me is the fact that I i think 5:13 everybody's talked to knows quite a bit about the wealth transfer that 98% of 5:17 wealth holders will be will be transferring their money to their next 5:22 generation and that 90% of those people will not be retaining their advisers I 5:26 know my own also being a mother of two Millennials they don't listen much to me 5:30 and and then we have also the statistic a 75% of widows changing advisers but 5:36 yet we see a stat that you showed in your in your presentation from IDC about 5:42 the majority of money being deployed in client retention how can we change that 5:46 up Steve that's right it's it's really I think it's a mistake to think about 5:50 client retention vs building new solutions that improve the client 5:55 experience as if you if you improve the client experience and and and make them 6:01 feel more connected to to the financial advisor to an institution built trust 6:04 that's going to retain clients so that's really the lead the way that you need to 6:09 go about it and I think that that really is surfing through all of the the 6:17 ridiculous amounts of data and information that today we we flood our 6:20 clients with most of which is not relevant to them to figure out what is 6:24 relevant to them to give you a quick example think about the recent 6:27 Volkswagen diesel gate right so that news item hits if you were set up 6:33 properly you can you can understand exactly who in in in the advisers book 6:39 that information is relevant to whether they hold that equity or related one you 6:44 could figure out 6:46 you know potentially linked to your research and linked to a specific 6:49 recommendation and then deliver that recommendation on the research to the 6:52 customer in an automated fashion give the customer the ability to react to it 6:56 now the system has provided relevant information at the right time giving the 7:01 customer the ability to react and the adviser gets that same information now 7:06 they know that the customer read it they know how they reacted and if they get a 7:11 phone call from a customer now there are much better prepared to have that 7:14 conversation that's a good experience and that's a scalable experience because 7:19 cuz its automated that's the kind of example are talking about here that's a 7:23 great Steve I wanna thank you for having an and spending the spire having some 7:27 time to spend with me on our wealth management minute here if people want to 7:31 follow you where where can they find you on twitter 7:33 absolutely on Twitter you can search for Steve Dunlap you'll you'll find me there 7:36 and you can also get my website which is at Stratham dot com that stratum of the 7:41 Y ok and I'm April ruden you can find me at the routing group and this is April 7:46 routine again thanking everyone for watching and follow IBM's hashtag IBM 7:51 insight insight thanks for watching