FinTech, the clever portmanteau of financial technology, has been the buzzword of the decade when it comes to financial management and investing. The advent of mobile trading apps, cryptocurrencies, and especially robo advisors has changed the landscape of wealth management. But there are still segments of the market that have lagged on the innovation front.
For high net worth (HNW) individuals with wealth in the millions, or ultra-high net worth (UHNW) individuals whose assets reach the tens or hundreds of millions, much has been unchanged over the last 10-20 years. Their complex investment strategies, and relationships with dozens of managers or custodians, results in a lot to keep track of; multiple, disparate accounts and plenty of paper statements and tax documents that easily pile up. The more money you have, the more difficult it is to produce accurate and timely reporting and advice–until now.
Until now, Registered Investment Advisors were so focused on the influx of office work required for larger clients, and as a result, more personalized relationships were difficult to foster. RIAs must manage tons of data entry, constant paper chasing, and agonizingly long waits for quarterly data. Without technology, there exists a constant time lag because information isn’t centralized. Advisors in the UHNW space were (and still are) data aggregators, gathering information from a plethora of sources at varying speeds throughout the year.
After far too long, the world of HNW and UHNW investing is finally beginning to see much-needed change. RIAs are beginning to see a flood of new technology that makes their jobs faster, easier, and more relationship-focused.
There are now some incredible solutions available, and firms should start taking advantage of the efficiency gains that will eventually be commonplace. Two major areas where technology is making improvements include Customer Relationship Management (CRM) and Document Management systems. Both systems have been around for a while now, but have traditionally been focused on internal data gathering and organization. More specifically, CRM systems were almost exclusively built for organizations that were transactional in nature, and primarily sales-focused. Think Salesforce; the name alone indicates the initial intent of the system. However, CRM systems now have a plethora of native functionality, as well as endless customization potential, either through manual build-out, or the addition of plug-in applications. Gone are the days of pulling data from one system and entering it into another.
Although not perfectly seamless, system integration is improving at lightning speeds, and customization is allowing firms in the UHNW space to build out a technology stack that finally serves the complexity of their client base. Satellite systems were the first step in centralizing chunks of data, but we’re seeing some fascinating opportunities to link up multiple databases to create one true home for information. Finding that right combination of parts can be a lengthy and strenuous process, but the gains are seemingly endless. Data from the CRM can now simply be pushed to document templates held in the Document Management System. From there, these documents can be “checked-out” for e-signature by the client, and then “checked-in” when done. What previously required cutting and pasting, printing, FedEx-ing, scanning, and re-filing now just requires a few mouse clicks. In addition, there are now solutions out there that will even download bills or account statements automatically. The process of gathering data is getting ever easier, and although there is still often some data entry, Artificial Intelligence (AI) solutions appear to be on the way to make this piece better as well.
The life of an advisor is improving considerably thanks to financial technology innovations, but what about the lives of their clients? Documents and reports may be arriving faster, and e-signature is likely appreciated by some, but what’s really in it for the client? Where is the value-add, and why should they continue paying the same amount, if not more than they already do?
Clients who have always looked to receive customized attention should be your biggest cheerleaders. With the advances in technology, both HNW and UHNW advisors have more information at their fingertips than ever before, and that should mean faster, more accurate information when or before it’s needed. Rather than being primarily reactionary–gathering data and reporting on it, advisors are starting to become proactive advocates for their client. Better yet, operational tasks can become standardized and systematized, which leaves time for true strategic financial planning. As projects begin to take less time, that leaves more time for a client’s projects.
New possibilities are coming to light daily, and the benefits of all this work are still tough to nail down in the short term. As we continue to implement and improve our processes, it’s clear major changes won’t happen overnight. Challenging projects require time, money, and careful planning, as we are always committed to meeting our clients’ unique needs. Some of these projects can take more than a year to reach completion, and while it does take time, implementing technological innovations to help grow client relationships is highly worth it in the end.
Here at Lake Street, we have worked diligently to monitor industry trends and focus on the solutions available in the market. While we may not be interested in being on the leading edge of technology, we do strive to find tested, vetted systems that can improve our own daily operations. In doing so, we find ourselves implementing solutions that have added great value to the productivity of each department within the firm, but our ultimate goal is producing time and opportunities to enable better client service. With that in mind, we have certainly had our share of small victories since beginning this initiative, and we look forward to adding these up and capitalizing on more exciting projects in the years to come.