Tech­nol­ogy and its dis­con­tents

The 2019 Wealth Mag­nets wres­tle with tech­nol­ogy, the tal­ent wars, the need to com­mu­ni­cate their value prop, and more

Accounting Today - - Wealth Magnets - By Daniel Hood

Fi­nan­cial plan­ning is not an area one thinks of as tech­nol­ogy-fo­cused — and yet for the CPA fi­nan­cial plan­ners in this year’s list of the Top Firms by As­sets Un­der Man­age­ment, tech­nol­ogy and its ram­i­fi­ca­tions are very much top of mind.

That’s not to say it’s the only thing they’re con­cerned about: When asked which is­sues they think are most press­ing for their field, many of the 2019 Wealth Mag­nets cited the war for tal­ent, com­pet­i­tive pres­sures old and new, the peren­nial is­sues of mar­ket changes and manag­ing clients, and even the ex­is­ten­tial need to clearly de­fine and com­mu­ni­cate to clients the value propo­si­tion of fi­nan­cial plan­ning.

But it was tech­nol­ogy that dom­i­nated their an­swers, on its own or wo­ven into other is­sues.

“Keep­ing pace with the var­i­ous tech­nol­ogy plat­forms avail­able to fi­nan­cial plan­ners is one of the most im­por­tant is­sues,” said Laura Beim­ler, op­er­a­tions man­ager at Vir­ginia-based Al­liant Wealth Advisors. “Since the in­dus­try is rel­a­tively small, it has not at­tracted any de­vel­op­ers large enough to build an in­te­grated tech­nol­ogy stack. So plan­ners are left im­ple­ment­ing stand-alone ap­pli­ca­tions for plan­ning, portfolio ac­count­ing, trad­ing/re­bal­anc­ing, CRM, fi­nan­cial plan­ning, data ag­gre­ga­tion, etc., and then build­ing data feeds be­tween all plat­forms in an ef­fort to be efficient.”

“There will con­tinue to be a greater adoption of tech­nol­ogy, both client-fac­ing as well as em­ployee-fac­ing,” added Jen­nifer McEachin, mar­ket­ing account man­ager at Wipfli Fi­nan­cial Advisors in Mil­wau­kee. “Pair­ing the power of an ad­vi­sor’s ex­per­tise with cutting-edge tech­nol­ogy is no longer a nice-to-have but a must-have. Ac­cess to tech­nol­ogy tools is now an ex­pec­ta­tion of clients at all stages of wealth build­ing.”

One down­side of tech­nol­ogy, ac­cord­ing to some Wealth Mag­nets, was the on­go­ing au­to­ma­tion of in­vest­ment man­age­ment and the rise of the “robo ad­vi­sor” — a de­vel­op­ment that forms a ma­jor part of a tan­gle of con­cerns about com­pe­ti­tion, fee pres­sure, and the need for fi­nan­cial plan­ners to ar­tic­u­late a com­pelling value propo­si­tion.

Com­pe­ti­tion and value

“The growth of the RIA in­dus­try will lead to a more com­pet­i­tive, fee-only en­vi­ron­ment,” warned Robert Klin­gen­smith, manag­ing direc­tor of wealth man­age­ment at Vir­ginia-based PBMares Wealth Man­age­ment. “Good for clients, not so good for RIAs.” Be­sides that, he added

that the field faces “fee com­pres­sion as more vir­tual ser­vices be­come avail­able, and low, to no-fee in­vest­ment op­tions grow in pop­u­lar­ity. Reduction in over­head and the abil­ity to serve broader au­di­ences means lower fees. Good for clients, not so good for RIAs.”

Juan Aguilar, direc­tor of op­er­a­tions at San Diegob­ased Rowl­ing & As­so­ciates, drew a straight line from com­pet­i­tive pres­sure to the need to stand out from the crowd. “One of the strug­gles with fi­nan­cial plan­ners is devel­op­ing and craft­ing their value propo­si­tion to clients,” he said. “We live in a time where robo advisors are ram­pant, bro­ker-deal­ers are com­pet­ing with RIAs, and the Van­guards of the world want their mar­ket share as well. It is that com­pe­ti­tion, as well as the push for lower fees across the board, that will make it more

dif­fi­cult to com­pete.”

De­spite those con­cerns, he re­mains op­ti­mistic. “Our firm is hon­ing in on the ‘why’ rather than addressing ‘what’ we can do to com­pete,” he said. “This, so far, has pro­duced div­i­dends with referrals and growth we haven’t seen in years past.”

Look­ing for peo­ple

One of the top con­cerns last year, the search for tal­ent re­mained press­ing for many Wealth Mag­nets.

“At­tract­ing qual­ity pro­fes­sion­als into our prac­tice to

ac­com­mo­date the growth will be a con­tin­u­ing challenge,” said K. Scott Barchus, pres­i­dent of Aldrich Wealth in Ore­gon. “We are re­cruit­ing aggressive­ly, try­ing new meth­ods of con­nect­ing with po­ten­tial ap­pli­cants and build­ing a strong, struc­tured in­tern pro­gram to al­low us to create our own pipe­line of fu­ture tal­ent.”

Re­cruit­ing and re­ten­tion can be par­tic­u­larly hard for a field that pri­or­i­tizes pro­fes­sion­al­ism and client ser­vice. “We are com­mit­ted to hir­ing ex­cep­tional over­achiev­ers who be­lieve be­ing a fidu­ciary is crit­i­cal to a client’s suc­cess,” ex­plained John Marchisott­a, manag­ing part­ner of Piv­otal Plan­ning Group in New York. “With un­em­ploy­ment at record lows, it has been more dif­fi­cult to find qual­i­fied em­ploy­ees. There­fore, em­ploy­ers need to think out­side of the box and have a cul­ture, sys­tems, train­ing and a com­pen­sa­tion plan de­signed to at­tract top tal­ent. This is forc­ing more con­sol­i­da­tion within the in­dus­try simply be­cause size does mat­ter.”

Peren­nial is­sues

As we reg­u­larly note in this re­port, there are two con­cerns that are per­ma­nent fea­tures of the wealth man­age­ment land­scape, and they were no less on the minds of the Wealth Mag­nets this year than in pre­vi­ous years: the com­bi­na­tion of an un­cer­tain mar­ket en­vi­ron­ment with un­ruly clients.

“The volatile mar­kets and un­cer­tainty are making it harder for clients to stick to the plan. Clients are want­ing to time the mar­ket or are fear­ful of putting cash in the mar­ket,” said Mon­ica Hamil­ton, direc­tor of fi­nan­cial plan­ning at North Carolina’s GreerWalke­r. “We are cer­tainly ed­u­cat­ing our clients and dis­cussing the ben­e­fits of their al­lo­ca­tion. We are also mon­i­tor­ing and dis­cussing cash needs to en­sure the client’s plan is ap­pro­pri­ate.”

Even if they’re not making risky moves, clients still re­quire manag­ing. “The most im­por­tant is­sues in the com­ing year are how to prop­erly man­age the clients’ ex­pec­ta­tions with re­gard to the chang­ing reg­u­la­tory en­vi­ron­ment, the volatil­ity of the mar­ket, and the ef­fect that it has on their portfolio, as well as look­ing at the value we can bring as tax pro­fes­sion­als in im­ple­ment­ing their fi­nan­cial plan,” said Char­lene Wehring, owner and manag­ing mem­ber of Texas-based Wehring Wealth Man­age­ment. “We are addressing these is­sues by hav­ing conversati­ons and meet­ings with our clients as we keep them in­formed. We are ap­proach­ing these is­sues from a proac­tive po­si­tion rather than a re­ac­tive po­si­tion.” AT

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