Sean presenting

Webinar: Next-Gen Wealth Advisor

Balancing efficiency with innovation (Dec 3rd, 2019)

We discussed how Next-Gen Wealth Advisors design their schedule and optimize their business to increase their independence and drive greater client impact. Interested readers should also checkout: Introducing the Next-Gen Wealth Advisor

Topics Covered:

  • Pillars of a Next-Gen Wealth Advisory
  • Challenges of a modern financial advisory
  • The technology stack for a modern wealth advisor

Webinar: Balancing Efficiency with Innovation

Let us know what you think in the comments below or on social media!

Full Webinar Transcript

03 Dec 2019 (‘Lightly’ Edited)

[00:00:02] Hi, my name is Sean Kruzel. Thanks for joining on this webinar on the snowy Boston Day. We’re gonna talk about the Next-Gen Wealth Advisor. Over the last year, we’ve talked to almost a thousand financial advisors across the country and have learned what they’re doing to differentiate themselves and their struggles. We’ve tied together some commonalities as they fight to balance time and technology to deliver value to their clients and grow their practice. We were going to talk about the uses of technology in their practice and discuss a framework that we’re using to help evaluate whether advisors are using technology to their fullest and where there’s opportunities for them to grow their business.

For a little bit of background, I founded Astrocyte Research about six years ago helping hedge funds by building advanced risk tools for them. Year and a half ago we launched Portformer, designed to help financial advisors identify lower cost, higher quality alternatives to their existing portfolios. We have some great partners in the space from Amazon Activate to Envestnet’s Yodlee. We’ve analyzed over 19 million ETF strategies to date, and our saving our clients 30 basis points in fund fees alone. On top of that, what our clients love is that we’re actually saving them hours of research each month by empowering them to dissect the growing number and complexity of mutual funds and ETF that is available to them to trade.

[00:01:59] So as we think about the Next-Gen Wealth Advisors, really we are going to talk about the balance that they’re trying to strike between greater independence and freedom, to save time and drive efficiency all in the purpose of creating greater client impact. That’s why they got into this and we’ll break [this talk] down into three sections.

  • The challenges that we’ve seen in talking to these hundreds upon hundreds of advisers this year
  • The four pillars that we think these advisers hold dear
  • Their tech stack: We’ll talk about how we decompose and build their practice.

This should take about 15, 20 minutes, and I’m happy to answer any questions at the Q&A or offline later as you think about the challenges of the Next-Gen Financial or Wealth Advisory?

Really, we break it into practice management challenges and research challenges. In practice management there is a wide variety of challenges. If you’re advocating low cost, transparent investment strategies, why doesn’t a client just take your advice as a one off and run with it themselves? Greater competition: you’re no longer competing with the financial advisors up the street, but nationally as well not that meetings and face to face contact isn’t as important. Margin compression: from higher technology costs and lower fees. The final common challenge is how do you engage the next generation of investors as your current client population is getting older now.

[00:03:45] Pretty much every advisor we talk to has these challenges. On the research side: how do you quantify the value that you bring to the table versus the robos and other people? How do you prioritize your time with the tens of thousands of different investment options available to you and your clients. Each client is getting more demanding, right? They are wanting more customized / bespoke solutions at lower costs. On top of that, you know, political environments and global economic environments are changing rapidly and it [is difficult] to stay on top of that.

So when we look at these Next-Gen Wealth Advisors, really universally, they they want ‘independence‘, ‘impact‘, ‘efficiency‘ and ‘innovation’. They are really thoughtful about how they achieve each of these. Let’s go through what we mean by them and what we mean by ‘deliberately differentiated’. How do you stand out with the greater competition and greater homogeneity amount financial advisors and the simple advice is getting more uniform. How do you ‘niche down’ with a unique investment philosophy that’s backed up by the research with very targeted client outcomes that you focus on?

When we think about more about ‘Independence’, you can actually have a say how you want your team configured. And so in this case, you may have a one person shop, a group of advisers that all handle everything, or maybe one person who is your research / markets person, maybe you’re a satellite leveraging a home office and you’re the satellite that can really focus on the client with the ‘last mile’ type of service. Finally other people are outsourcing CIOs and investing in more model portfolios.

[00:05:35] And we’re not saying any of these are the right ones or the wrong ones. Well, we think, it’s worth figuring out which one you are currently in and whether that will be the right configuration for your business going forward. ‘Independence’ also means you can define a client service model tailored to how you want to run your business. It’s highly customized, highly scalable or, if it’s gonna be in a AUM based-fee, fixed fee or an hourly type [billing] model.

Which products and planning’s services you need or want to give? There is this client growth model that we think differentiates these independent financial advisers. They tend to be very cognizant of the client journey going from, ‘education’ / ‘awareness’ all the way through ‘on-boarding’ and ‘management’. This is a similar pipeline you’d see in most online marketing kind of companies or modern SaaS organizations. Our company is very familiar with these stages as we on-board new clients and we’re going to dive into this in more detail later.

[00:07:08] On the ‘impact’ side, universally we’ve found, advisors want to achieve long-lived impact for their clients. They want it to be wide ranging, and not just focused on financial security. They want to impact their community, with very specific and tangible kinds of results. It is no longer enough to just have a trusted relationship an advisor, I think the impact now needs to be measurable. To achieve that kind of measurable change, we really view the ‘education’/’awareness’ side that talks about educating the community. Whatever you define as quantifying those goals to that community and finally adapting over time to changing conditions in your advisory, your client base or within the global markets. On the efficiency side, it’s really about the trade offs of time versus technology. These are your resources, takes time to create new technology, but that technology eventually should save time and drive more value. And regarding innovation… I’m just going to we’ll go into this in more detail in later webinars. But suffice to say, being cognizant of how you get your information, and how you distill it, is critical to staying on top of things and not wasting a lot of time.

So we’ll get to the technology stack now that we’ve talked about the lifecycle of a client. For example, when we look at Michael Kitces’ FinTech Map that he’s created, it’s incredible to observe the amount of options that are available to an advisor these days. It’s truly staggering.

[00:09:03] So on top of that, we’re also very lucky that we were recently added to this map. So here is Portformer in the Investment Data / Analytics alongside FactorX, Ycharts and even Morningstar. We’re very honored to be a part of this and and are excited to be there. However we view this map as kind of a taxonomy. It’s a categorization. It doesn’t tie well to how value is being created; how this technology drives value to your financial practice.

We like to think about technology aligns with workflows. One key advisor workflow is the managing inbound clients interest. How efficient is it? Secondly, how can you use technology to onboard clients more efficiently and lastly what processes are in place to grow assets and retaining them?

So those three sections of your business can be useful in a lot of ways. But we actually like you can kind of go back here to this typical SaaS pathway: a client will know that they need financial advice, they’ll be aware that of how you run your business, they’ll have a need or some sort of decision point, you’ll sign them up, you’ll load in their accounts and you’ll manage their assets.

We’ll actually sort of twist this graphic around. When we do this, we can see we’re actually missing a line here. And that’s the ongoing cycle of management. When you’re thinking about a client that there are often life events which will change their financial plans, which need to be dealt with almost as if they’re a new client in many cases.

[00:10:39] So when we look at this. We can now break down the business model into the first two steps and talk about client expansion for your business. The last loop is really revenue expansion.

Another way we kind of break that down is to say, well, these are your top content marketing referrals and outbound work. Here’s where your CRM and planning tools. Really show the value that you can deliver proposal generation to close and implement a plan. Onboarding all the accounting, billing stuff, research and training for the management, and you see that each one of these sections could tie into pieces of their Kitces Map or other ways to organize data we think is a more useful breakdown that ties to the workflow of the client and how advisers actually manage their business.

To look at some providers here. This is not an endorsement for or against any technology provider. To look at the first example here, some advisors might have websites built FMG Marketing with Snappy Kraken as their marketing or WiserAdvisor to help generate inbound leads. These actions are fed into WealthBox and financial plans are created from MoneyGuidePro. Then Riskalyze is used to assess the risk tolerance and compatibility of an investment strategy and Portformer is used in the proposal stage to identify lower-cost alternatives to existing investments and to make sure you have an efficient portfolio.

[00:12:24] For the onboarding, you can use DocuSign and AdvicePay to process the billing and documentation. When we look at the Research side of things, we see YCharts and Portformer (So it’s my webinar. I can put Portformer twice on this thing) So here we have the research and trading staying on top of market moves and insights.

By focusing on the workflows and not just features of we’re really trying to look at the workflow and to drive value in each part of the process and to be very deliberate about what each tool and technology is doing to drive value here. We’re really curious to see how you integrate technology into your financial advisory practice.

In summary, we’d love to hear from you about how you organize your workflows, what tools you think are working well for you and where there are gaps in your process. Our goal is for you as an independent wealth advisor who’s part of the Next-Gen community here to be extremely efficient and to drive that value beyond just helping your clients achieve goals, towards having an impact in the community, having impact over entire lives and families while differentiating yourself and your practice in an increasingly competitive world.

So we’re excited to be your partner in this journey. Hope our way of organizing the various technology options helps offer some clarity out there. And I love to hear from you. So thanks for your time. We’ll take questions now. Thanks.

Sean Kruzel

Based in Boston, Sean is a portfolio manager, MIT grad, and founder of Portformer. When he’s not investing or programming, he’s probably sharpening his skis for the next icy, New England snowstorm. Check out his full bio here:


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