Tech Extravaganza

The T3 Advisor conference in San Diego offered an early look at some trends—and a lot of new solutions.

The annual T3 Advisor Conference is one of my favorite meetings of the year, because, well, I guess I must have a geeky side to me.  The exhibit hall is always rocking with new tech applications, programs and solutions, many of which I’ve never heard of before.  You see a cross-pollination, where the chief technology officer at one booth walks over to talk with the CTO at another one about integrations or cooperative ventures.  The advisors who attend are generally leaders of their study groups and communities, the early adopters that everybody else watches to see what new tech they’re adopting or switching to.

After spending four days immersed in all things fintech, I am coming up for air—and sharing my observations of what’s happening in the fastest-evolving sector of the financial services profession.  As in past years, I’ve organized it as winners and losers—or maybe more precisely, the ascendant concepts and the ones that seem to be fading a bit.

Winner: Open APIs

There was a lot of (understandable) angst in the profession when it was announced that Schwab was buying TD Ameritrade—and nowhere was there more consternation than in the emerging fintech space.  TD Ameritrade Institutional was by far the most open custodial platform to new tech firms, while Schwab has historically been the least.  It feels like a step backwards.

At the heart of it is the open API concept.  APIs (Application Protocol Interfaces) are the communication links between different computer programs.  They facilitate the accurate transfer of data from, say, Redtail to MoneyGuidePro and back, or between your client’s investment data at TradePMR and AdvisorPeak (for trading, rebalancing and tax-loss harvesting) or Morningstar Office for portfolio tracking and performance reporting.  This can be complicated if the programs are written in different languages, and more commonly the fields that are being exchanged are given different labels buried within the programming language of the various programs. 

To get an integration, the normal procedure is for a new tech offering to contact the custodian and ask the custodian to facilitate a hookup to its data, which means the custodian’s staff would have to prioritize the request and get around to it when they could (or decided to). 

TD Ameritrade Institutional’s Veo operating system’s open platform concept meant that the APIs were made available to tech companies who passed its due diligence and cybersecurity screens.  The new tech company didn’t have to get on the custodial tech staff’s waiting list; it could facilitate its integration with its own team of programmers. 

This is why virtually every new tech company that needs a custodial hookup starts with a Veo integration and then petitions the other custodians for however much of their tech staff’s time and attention those companies decide to allow.

That’s a long way of saying that many of us believed that losing Veo would be a huge setback to the profession, and I still believe there is truth to the sentiment.  But at T3, there seemed to be a broad conceptual breakthrough, where open API discussions were everywhere.  TradePMR has opened up the APIs to its custodial platform.  Fidelity announced the upcoming introduction of an API “store.”  Riskalyze’s CoPilot lets programmers go online and see the APIs that they need.  Envestnet MoneyGuidePro announced that it has now set up an online store where vendors can buy APIs without having to interact with the company—and (see below) so too can wealth management firms.  (Orion and Envestnet have been offering something similar for years, and Redtail has traditionally been prompt about having its programmers facilitate integrations with new tech offerings.)

Meanwhile, as you know, E*TRADE Financial Corp. is rewriting its platform from the bottom to the top, with the new version due out this summer (assuming, of course, that is still in the plans for its would-be acquirer: Morgan Stanley).  At the E*TRADE booth, I discovered that the custodial platform’s director of institutional products, Raj Bhaskar, was one of the original developers of TDAI’s Veo platform, and he said that the open API concept is very much a part of the new E*TRADE rollout.  I find myself hoping that Morgan Stanley will spin off the custodial platform into an independent entity and keep E*TRADE’s retail operations, but even if that doesn’t happen, it looks like we’ll have one more open API custodian in the marketplace.

There was even a compliance solution API development at T3.  If software companies want to add a compliance overlay to their offering, they can now plug into RIA in a Box’s open API (https://www.riainabox.com/) and build their own integration.  That would most likely involve CRM applications.

The most comprehensive open API announcement came when Oleg Tiskevich, of INVENT.US, announced that his firm was developing a comprehensive API platform which will serve as a universal translator between any one program’s/platform’s protocols and all the other ones.  Tiskevich’s firm offers “cloud native” programming, where the actual work performed by software is broken down into applets, so that if an advisor asks for a cool new feature, the programmers can update the applet(s) with the new feature in hours and present rapid upgrades.  The API translator would come in the form of applets, so that a programmer can plug in his program’s APIs and have it work with custodians and other software on the other end.

This new commitment to open integration is going to be a huge boon to new tech offerings, and I expect to see more and better integrations among more new tech than we have ever seen before.  Even so, I suspect the biggest winners are going to be larger advisory firms.

Why?  The multi-partner wealth management firms have sufficient scale to hire a programming team to build a customized, firm-specific user interface linking all the components of its tech stack into a single unified desktop experience.  The end result is more integration, more efficiency across the various departments in the firm, and potentially an advantage over smaller firms who have to switch from one program to another to get things done.

In a few years (T3 2022?) all this integration will have migrated down to the smaller advisor level.  Before long, I expect to be reporting that some prominent wealth management firms are marketing their user interfaces.  But for the time being, the open API trend is going to be a boon to the tech convenience of people working in the larger wealth management space, and could become a recruiting advantage as well.

Winner: AI

Last year, I put artificial intelligence in the “loser” category.  It seemed like every presenter was paying lip service to the absolutely crucial importance of AI technology, but where were the actual applications?

This year answered that question in a big way.  We are not talking here about robo advisor platforms, which are nothing more than fancy algorithms that say that a person who answers four questions in a certain way should be invested in the most conservative of four model portfolios.  And we are not talking about the other end of the spectrum, where the some future theoretical software handles your client meetings while you sit back with your feet on the desk, nodding approvingly. 

But finally we have systems that are learning from their experiences, and providing contextualized information based on client responses.

Let’s do a progression from “sort of AI” to something that you might call “proto-AI.”  My first hint that we were on our way to intelligent software came when CEO Abraham Okusanya showed us the most recent version of Timeline (https://www.timelineapp.co/), which is a tool specifically designed to help advisors give portfolio decumulation advice to retiree clients.  The program takes in a client’s current assets, age and expected lifespan, looks at the projected retirement expenses, and produces what most planning software does: a success rate, the odds of success ranging from 0% for the person living on the street to 100% for the ultra-wealthy.  You can input a legacy and you can change the longevity assumptions, and see how that impacts the odds.

So where does AI come in?  Timeline users start with the client’s current portfolio mix and spending habits, and then it scientifically improves the rules around how they will take money out of the portfolio.  They can choose strategies based on research that you are probably familiar with: Bill Bengen’s 4% rule, or Jon Guyton’s “guardrail strategy” (adjusting distributions for market returns), or a floor and ceiling rule (where you freeze distributions from the portfolio if they become too high a percentage, and raise distributions if the percentage falls below certain thresholds), the “ratcheting rule” proposed by Michael Kitces and Wade Pfau (where the allocation to equities rises as the client gets older)—or combinations of these. 

Okusanya showed how a client with a 35% chance of success under a modified Bengen approach could raise the chance of success to 90% by applying a combination of the floor and ceiling and ratcheting approaches.  Pretty dramatic!  The program also evaluates the changes in a client’s chances of success in real time based on market movements, alerting the advisor to the potential need to change strategies in order to preserve the client’s retirement sufficiency.  I don’t think there’s a tool out there that does a better job of augmenting the judgment of an advisor, and I look forward to a tax-aware version of the program.

Another automated solution was created with the integration of AdvisorPeak (https://advisorpeak.com/) and LifeYield (https://www.lifeyield.com/)—two companies that never seem to get the attention they deserve. 

LifeYield is basically a solution for the problem of asset location; you feed it a household-level set of portfolios across IRAs, 401(k)s and taxable accounts, and somewhere in the cloud a computer shakes and hums, and sends to your desktop a ‘Taxficient Score,’ ranging from 0 to 100.  The software also provides an expected long-term after-tax yield on the portfolio, and makes some suggestions on where you could shift things around to get a higher score and greater after-tax yield.  Every year, I see a demo, and every year the differences can be surprisingly significant.

AdvisorPeak, meanwhile, is one of the most advanced trading/rebalancing programs on the market, which flags when portfolios are out of your asset allocation tolerances (which you set), and whenever there are tax-loss harvesting opportunities (whose ranges you specify).  You see the tax implications of each rebalancing transaction at the lot level.

So how is this AI-like?  From the quick demo I saw behind a number of advisors, it looks like after LifeYield makes its suggestions, you can get AdvisorPeak to show you exactly the trades you would need to make to take the household to 100% asset location tax efficiency—and you can evaluate whether you want to trigger the taxable gains and whether any of the trades would involve short-term gains—all processed automatically and presented on the screen.  Computers in the cloud are doing an awful lot of your thinking for you, but they still rely on your final judgment.

We took a step deeper into AI when the new “MyBlocks” version of Envestnet MoneyGuidePro (https://www.moneyguidepro.com/ifa/Home/MoneyGuidePro#product-pro) was introduced.  The concept of blocks is pretty straightforward: click on a block and you are taken to a specialized calculation engine for a particular type of financial challenge.  MoneyGuide’s Chief Growth Officer Kevin Hughes offered a quick demo of one of the 25 blocks, which would allow a high school student to model her financial future.  The student clicks on the block and can choose whether she plans to go to college or enter the workforce early.  She selects “college,” and then is asked whether she will go to community college for the first two years. 

No?  The program then starts to pull a bunch of contextualized information based on publicly-available data.  The would-be student is encouraged to pick a degree, and explore the options.  Each degree shows average starting salaries for the newly-minted graduate, plus the “placement percentage,” meaning what percentage of graduates are employed immediately out of college.  She can pick from a variety of colleges offering the major she favors, and the software will show the total annual expenses for in-state and out-of-state students. 

From there, she can see financial aid options: grants, gifts, loans, and then the software creates a future monthly budget based on that average salary figure we saw earlier, the monthly costs of the student loans that were calculated on a previous screen, average costs of living where the student expects to live, and budgeted amounts built in for saving for a home and for retirement.

Moving up the AI scale, there was a surprising amount of buzz about a program called Holistiplan (https://www.holistiplan.com/)—surprising because the company didn’t have a booth at T3.  I’ve written about Holistiplan before, but the gist of it is that you can feed the PDF of a client’s tax return into the online program, and it will instantly map out the relevant information, analyze it, and provide suggestions and observations that can be used to make planning recommendations. 

I think most of us have seen presentations where a really smart CPA shows how he can scan through someone’s tax return and know a great deal about a client’s financial life.  With Holistiplan, YOU are that CPA, and I would argue that this represents the closest thing to artificial intelligence that we’ve yet seen in the advisory space.

Until now.  At T3, a presentation by Andrew Altfest, president of Altfest Personal Wealth Management in New York City introduced FP Alpha (https://fpalpha.com/), which does essentially the same thing that Holistiplan does, except on a broader scale.  The program reads tax returns, account statements, estate and trust documents, insurance ledgers, mortgage statements—17 categories of client information documents in all.  Altfest was able to get 40 attorneys, CPAs and CFPs with subject matter expertise to provide their observations and recommendations for different possible types of data from the documents, and their insights are built into FP Alpha’s algorithms. 

How does it work?  You input various client documents, and the program produces a  score for individual aspects of a person’s financial life (tax planning, estate planning, various insurance coverages, creditor protection, student debt, budgeting, mortgage debt), depending on what has been and what needs to be completed.  The program also generates an overall score for the client’s total financial life, from 0 to 100.  There are recommendations for what to do next in each category.  As you and the client progress through these pre-flagged inefficiencies in the client’s life, the system tracks client progress toward a 100 score graphically over time and item by item. 

This, finally, is the AI that everybody has been paying lip service to for all these years.  I plan to do a full profile and review of the software in the near future.

I suppose I should have felt triumphant and excited upon seeing FP Alpha, but instead the presentation made a part of me nervous.  The scary thing about the advent of advanced AI-like applications, I suddenly realized, is that programs like Holistiplan and FP Alpha would seem to allow any fool to provide high-end financial planning advice without a shred of technical expertise.  This is a trend to watch with a certain amount of excitement, anticipation and anxiety for professional fiduciary advisors.

Winner: Seamless account opening

Is there any bigger hassle than managing the paperwork to bring on a new client and move the accounts over to your custodial platform?  Have you been waiting with growing impatience for the custodians to offer a speedy, seamless onboarding process?

Until now, the custodians have been paying lip service to this kind of solution, but at T3 we were starting to see some action.  In the Schwab presentation, we were told that account opening forms are being replaced by a digital process—someday…  Later, TradePMR (https://tradepmr.com/) announced a more tangible new digital client onboarding process.  Orion (https://orionadvisortech.com/) has its own onboarding technology that interacts with many of the custodians. 

As far as I could tell, Agreement Express (https://agreementexpress.com/) was not at T3 (see my January issue for a profile), but there was a booth for a company called Skience (https://www.skience.com/), which is another independent software product that facilitates account opening across households with electronic signatures.  The program can be launched from the advisor’s CRM (which prepopulates the forms), and integrates with the major custodians.

The most advanced account opening process was offered during a presentation by Jason Wenk, founder of a brand new custodial platform called Altruist (https://altruist.com/).  You create a household online (through online forms, with no paperwork), and the information entered into the fields is validated in real time through error checking in the Internet.  Does that address exist?  Is that correct contact information?  (As you know, you could enter entirely bogus data into most account opening forms—which of course will get them kicked back to you as NIGO.) 

Taken together, these new announcements have the potential to create an arms-race of convenience among custodians, and it won’t just be about account opening.  Wenk’s presentation offered a variety of things that are still on other custodial drawing boards, including fractional share trading (he offered the example of a young investor who owned 30 cents worth of Berkshire Hathaway in her diversified portfolio), mobile and web performance reporting, fee billing not just as AUM but in a variety of ways including subscription and project-based, and of course zero commissions. 

The takeaway here is: if Altruist, TradePMR and several software providers can provide seamless eSignature onboarding without PDF documents, the larger custodians ought to be able to do it too.  And they will.

Winner: Automated Digital Marketing

Where do I start with this one?  One of the best presentations at the T3 conference was delivered by Robert Sofia, founder of digital marketing firm Snappy Kraken (https://snappykraken.com/).  Sofia didn’t talk about what the firm does.  (Most of us knew that it automates the social media posting of teasers back to your blog, and helps you create what Sofia calls “uncanned” content.)  Instead, he made the case for social and digital marketing. 

Sofia’s formula: make sure your content is specialized for your intended ideal client, and cross your content with the affinities of your target audience.  Example for a person who is interested in travel and leisure: Ten Surprisingly Affordable Vacations—crossing travel with finance.

Sofia provided statistics showing that email contact is the most productive way to get traffic for your blogs and drive conversions, so you should find ways to collect prospect email addresses.  When you go out to social media, recognize that 67% of social media traffic is on Facebook, and 26% is on LinkedIn.

Also: create intelligent nurturing processes via email.  When you send messages, use bold imagines and bold, short text—which are very easy to instantly digest.  “You want meaningful connections,” said Sofia.  “Automation is merely the tool toward making authentic connections.”

So Snappy Kraken is your only option, right?  Very wrong.  The exhibit hall also included AdvisorStream (https://www.advisorstream.com/), which has bought licenses to content from The Wall Street Journal, Barron’s, Forbes, Reuters, Money, Business Insider, The Washington Post, and the New York Times, and also supplies articles, videos and infographics on various financial topics.  You sign up, and your clients get curated content that you can approve or filter to your preferences.  Clients never hit a paywall, even if they don’t have a subscription, because the content has already been paid for.

I didn’t see the session, but the online marketing platform at FMG Suite (https://fmgsuite.com/) is about to offer something similar, called Curator, with articles from Forbes, Golf Digest and The Wall Street Journal.  And a program called Indyfin (https://www.indyfin.com/) puts a new twist on the online marketing concept by charging, not a subscription fee, but only when prospects actually become clients.

Finally, there was TwentyOverTen (https://leadpilot.io/), offering a new service called Lead Pilot.  The program provides content that you can customize and send out to prospects and clients—including infographics, blogs, polls and videos.  The platform lets you post on various social media sites with a click, all of it leading back to your landing page.

The most interesting part of Lead Pilot was an AI-like algorithm (that trend again) which gives each person who interacts with your material a score, measured by how often they have clicked on what you post.  I thought the process got a little creepy when it was announced that the system will identify anyone above a certain interaction score and scrape the web to find out all the information available on those people, based on their social media interactions. 

But you want that data on people who are increasingly engaged with your posts.  Don’t you?

Loser: Broker-Dealer platforms

This is not for lack of trying; there was a good presentation by Bert White, chief investment officer at LPL Financial (https://www.lpl.com/), which argued that advisors should cultivate adaptability in the tech space above anything else.  (Not a bad point.)  I saw a passionate flash session sponsored by Raymond James (https://www.raymondjames.com/).  Cambridge Investment Research (https://www.joincambridge.com/home/) had a nice booth in the exhibit hall.

These firms are among the few independent BDs who recognize that they are fighting two powerful trends at once.  The first is the growing number of advisors who are looking for opportunities to leave the sales environment (and FINRA regulation as salespeople when they are, in fact, increasingly advice-givers), to become independent, fee-only and able to talk with their clients like an adult without a compliance department constantly monitoring every word of every communication. 

The newer of the two trends arises from Schwab’s move to zero commissions, followed by TD Ameritrade and Fidelity.  Why (a dually-registered rep might ask himself) should I pay a percentage of my income to the BD when I can get a better custodial platform essentially for free?

The challenge for independent broker-dealers is trying to convince, first their own reps, and possibly also fee-only advisors in the larger community, that their platform is equal to the independent custodial choices.  But therein lies the problem.  Because the broker-dealer platforms are not free, the BD value proposition has to be extraordinary: BETTER than the independent custodians, who are by and large more scaled and have more resources to build out tech capabilities. 

It seems to me (I could be wrong) that this is going to be a losing battle unless the independent BDs can find a way to move way up the value chain.  It doesn’t help that they seem to have been caught off-guard by the move to zero commissions, and have been somewhat complacent that their reps are going to stay loyal and pay (in some cases) millions to be on a platform when they could affiliate with a superior one for essentially zero out-of-pocket costs.

Loser: Any new tech company that didn’t have the budget to buy a major sponsorship

The exhibit hall included a wealth of really cool specialized programs, but only a few of them (Covisum with its Social Security and tax analyzers, Andrew Altfest with his AI system, TimeLine with its decumulation solution and Redi2 Technologies’ BillFin (https://www.redi2.com/billfin/)) were on the main stage.  The keynotes were presentations by the usual suspects: Envestnet (https://www.envestnet.com/), Morningstar (https://www.morningstar.com/products/advisor-workstation), AdvisorEngine (https://www.advisorengine.com/), MoneyGuidePro, Schwab (https://advisorservices.schwab.com/), TD Ameritrade Institutional (https://www.tdainstitutional.com/), Salesforce (https://www.salesforce.com/solutions/industries/financial-services/overview/), Fidelity (https://clearingcustody.fidelity.com/app/item/RD_13569_42630/ria/registered-investment-advisors-rias.html), TradePMR, Orion, Black Diamond (http://blackdiamond.advent.com/), BNY Mellon/Pershing (https://www.pershing.com/) and Riskalyze (https://www.riskalyze.com/).

Some of the others had presentation time during hours when there were very few attendees.  I saw BillFin on the main stage, but the presentation was lightly attended; the company is offering customized fee billing similar (but not yet as flexible) to AdvicePay (https://advicepay.com/), which was also relegated to a backwater session time.  Likewise,  I was one of the only people in the room for presentations by ATA RiskStation (https://atariskstation.com/), which models how much clients would lose in their portfolios under different economic scenarios.  Another obscure time slot presentation was FixFlyer (https://fixflyer.com/), which facilitates trading and managing model client portfolios), and I was among the few on the last day to see FeeX (https://www.feex.com/), which allows advisors to manage clients’ held-away assets. 

The final day also featured a presentation by Rob Major at AssetBook (https://www.assetbook.com/), which is currently the most cost-effective portfolio management/reporting system on the market, newly rewritten from the ground up.  One of the CRM competitors, XLR8 (https://xlr8crm.com/) delivered a ‘flash’ session describing its customized advisory firm overlay on Salesforce that is actually less expensive than buying Salesforce directly. 

Among the smaller independent custodians, Shareholders Service Group (https://www.ssginstitutional.com/) was also assigned a ‘flash’ session despite having the highest custodial category rating in our software survey, and fpPathfinder (https://www.fppathfinder.com/) should have gotten more media play.  It basically consists of a very detailed set of 15 checklists that advisors can use during client meetings, to make sure they didn’t miss anything. 

Any and all of these look like great solutions, but they are caught in a chicken-and-egg situation, where they don’t have enough users to have the revenues to pay a premium exhibitor fee, and how are they going to increase market share if they’re largely invisible to the conference audience? 

The way we organize our conferences seems (inadvertently) to provide a lot of advantages to the market share leaders to perpetuate their hold on the marketplace.

Takeaways: The world is changing

I suspect that for some of you, this is not earth-shaking news, but the speakers were enamored with this topic.  Rich Cancro at AdvisorEngine (https://www.advisorengine.com/) talked about organizational adaptability, the character trait that will allow any firm to evolve as clients age and need different types of services—as big data offers new opportunities, as the firm experiences new competition from the likes of Goldman Sachs and (now) Morgan Stanley. 

Cancro offered an interesting thought experiment: suppose you somehow manage to keep the client assets inherited by the children of your clients.  On average, that means that, for each household, you suddenly have the same assets divided among 2.2 clients.  At the same time, let’s say you experience just a bit of annual fee compression.  Cancro’s numbers showed that the combination could reduce your firm’s EBITDA by 54% over ten years—and you and your staff would be working 60% harder.

His advice: design the firm of the future, and then align your processes to that vision.  Create a digital marketing capability and above all, engage your stakeholders throughout the change process.

Morningstar had a different take on the change topic.  Peter Franco, senior product manager, noted that advisors are increasingly using models and offering goals-based planning advice.  He outlined a 3.0 version of Morningstar Advisor Workstation that offers some pretty cool prospecting tools: you can back-test proposed models against what the client’s portfolio has historically generated, and compare results over different time periods and scenarios.  You can also “x-ray” client portfolios to see what they’re holding (to be used if the statement doesn’t lay this out clearly).  There are a variety of tools for portfolio construction and analysis, plus a branded client web portal.  Plus a risk assessment tool that calculates a client’s risk necessity to reach goals, as well as the volatility of proposed portfolios.

The thing I noticed throughout this presentation was a change that Franco did not talk about: advisors moving to ETFs and passive management, which means they are less interested in comparing and contrasting actively managed funds.  Advisor Workstation 3.0 is pivoting from investment analysis to advanced portfolio construction.

Tricia Haskins, VP of Strategy and Platform Consulting at Fidelity Advisor Solutions (https://institutional.fidelity.com/app/home/financial-advisors) picked up the ‘change’ theme by talking about the end of retirement as we know it and people living longer.  She outlined the advisor’s new and improved (beyond AUM) value pyramid: investment management at the bottom, achieving client goals above that, then achieving peace of mind, and finally helping advisors achieve fulfillment. 

White, from LPL, found a generous way to say that the founders and most experienced advisors are stuck in the mud when it comes to adapting new solutions.  He said that experience can be an advantage and a disadvantage: an obvious advantage since the company founder has learned a lot of lessons in the course of his/her career, but a disadvantage in that it can lock your thinking.  “The faster the world changes, the faster your experience expires,” White told the audience.  “Today, business competency is only relevant five years before it expires.”

White said, controversially, that in today’s world, value is provided to clients, not through service, but through convenience—his term was that “the return on experience is the new ROI” in client relationships.  The goal is to help people buy time from you—time that they can redeploy to focus on the things they want to do, while your firm takes on the chores they prefer not to.

Kerry Ryan, Director of Wealth & Asset Management at Salesforce (https://www.salesforce.com/form/demo/salesforce-products/), told us what we already knew: that the advisor value proposition had evolved from stock picker to planner to coach—though the last evolution is still playing out.  Bill Crager, acting CEO of Envestnet, said essentially the same thing when he told the audience that the profession has been too focused on investing, and not focused enough on financial wellness and connecting clients’ daily activities with their long-term goals.

The two most interesting change presentations came toward the end.  Joe Elsasser, CEO of Covisum (https://www.covisum.com/), suggested that clients look to their specialized analytical tools when they create marketing materials for their clients.  He set up two advisors side by side; one was a generalist who hosts seminars and converts strangers to become clients.  The other had a different process: she asked her favorite clients what questions they wanted answered.  Then she would go into the Tax Clarity or Social Security analyzer and build familiar cases that would be posted, with social media teasers to drive traffic.  The blog would show a typical situation, and then the analysis and the “solution” to the problem.

“Identify one key client question at a time, and address it,” Elsasser told the audience, “and before long, you’ll have a niche.”

The other really interesting presentation on change issues was delivered by Dani Fava, Director of Innovation at TD Ameritrade Institutional (https://www.tdainstitutional.com/).  Fava suggested that the audience think about technology in a new way: what problem is tech trying to solve?  She offered a historical perspective; the first AI application was invented in 1955, and the first smart phone was invented by Radio Shack in the 1980s.  There were videoconferencing applications in 1970.  But it was decades before people actually needed these solutions in their daily lives.

So what is she seeing today?  Fava is interested in crowdsourced platforms.  An example none of us had ever heard of was TransferWise, where 6 million people go online to trade currency, essentially giving each other currency conversions at the going rate, instead of at the Bank’s fee-laden rate.  A website called Prosper, meanwhile, lets you lend college students their tuition payments (easing their future student loan burden), and as you do that, you can check out their potential for career success. 

Why is that important?  Because under the contract, you will receive a portion of the student’s annual salary—a “loan” which doesn’t show up on the new graduate’s balance sheet, making him or her more eligible for a home mortgage or car loan in those crucial starting out years. 

Fava also noted a potential social roadblock that few of us are looking at in advance.  Statistics show that the baby boom generation will be selling 25% of all U.S. homes over the next 20 years.  But this could be tricky, because autonomous vehicles and flying cars are going to change where people want to live.  “Millennials may not want to live in cities,” she said.  “This could upend the housing markets in urban areas.”

Fava closed with a really interesting point, saying that every advisory firm should have a podcast.  One reason: 50% of households listen to podcasts.  Another, more compelling point: When your favorite client is asked for the name of an advisor, he or she might give your name and maybe your phone number—information that is easily forgotten, and does very little to demonstrate your value.

But if you send your clients regular podcasts, your favorite client can forward one or two of them on to a friend who’s looking for an advisor.  If that podcast happens to address an issue that the friend is interested in (see Elsasser’s recommendation), then that friend happens to be right there on your website, learning about your value.  Connecting with you becomes a thousand times more likely.

Is this not a lot to happen in one conference?  Yet I’m afraid this writeup is nothing more than a broad sketch of the big picture, gestalt impression that I was able to take from walking around the crowded exhibit hall, main stage and peripheral sessions over four days in San Diego.  It’s really astonishing how many solutions there are, and how many people have put so much time and energy (and programming) into developing software products to ease the burdens on your business life.  I had to stop in the midst of all the booths, turn slowly around, and realize that many of the less-well-known companies represented the hopes of people who are trying to become mainstream providers for the financial services industry, and they have gambled their careers and most likely a big chunk of their life savings on that bet.

The overarching theme of the 2020 T3 conference was that the advisory firms that are most adaptable, most open to change, most alert to new possibilities, would be the most successful in the future.  I would personally recommend that you check out some of the companies I mentioned that you may not have heard of, and I fully expect to see many of them gaining market share and joining the mainstream at some point in the future.