IMAP’s third consecutive InvestTech conference showcased the latest technology offerings and solutions for the managed accounts sector.
With managed accounts at the forefront of technological change in financial services, over 220 people attended IMAP’s InvestTech 2019 conference on 13 November.
Delegates heard from industry experts about the latest developments and trends in technology, which is transforming the way in which advisers and licensees produce and deliver advice.
The following are some of the highlights of InvestTech 2019.
Disrupting the disruptors
One of the key trends in wealth management technologies emerging in the U.S., bucking the trend in markets like Australia, is the move by some of the large asset managers, like Charles Schwab and Vanguard, to disrupt the disruptors in digital technology.
Speaking at the InvestTech 2019 conference in Sydney, Morningstar Australia and New Zealand managing director, Jamie Wickham, said there was a growing trend in the U.S. where asset managers and banks were increasingly developing and rolling out technologies that “envelop the client”.
“Unlike in Australia, where banks and larger institutions are looking to exit the advice space due to regulatory issues, in the U.S. it’s the opposite, with more banks entering the advice space. Banks have identified the opportunity in the growth of financial advice by American consumers.”
Wickham identified an increase in hybrid advice propositions in the U.S., consisting of both digital and client-facing offerings.
“The likes of J.P. Morgan and Goldman Sachs are leveraging their balance sheets, customer base and technology, to provide more enticing advice offerings to their clients.
“This has resulted in the rise of ‘freemium’ models, where basic services and products are provided free of charge. For example, no fees on transactions and no fee index funds,” Wickham said.
“But in order to do this, you need scale, as there is a short-term hit to revenue for a long-term relationship with the customer. It’s certainly a good example of how these larger organisations are disrupting the disruptors in America.”
Wickham identified the growth in Registered Investment Advisers (RIAs) as another emerging trend in the U.S., with RIAs now representing the fastest growing sector of the advice market.
“RIAs have moved from product sales to client-centric advice,” he said. “We’re now seeing a trend in the U.S. where advisers are using model portfolios.”
Advice 2020
“Change is happening. You can’t stop it. And at the heart of this change will be technology.”
This was one of the key observations from Jacqui Henderson – the CEO and founder of Advice Intelligence.
Speaking at the InvestTech 2019 conference, Henderson said that whether it’s regulation, technology of client experience, change is now a significant part of the financial services landscape.
“Consumer demand for change is greater than ever, so moving forward, advice needs to be transferred into a client-centric lens. Consumers want advice that is tailored to their goals, and that’s where technology can help, by enabling clients to curate their own advice requirements,” Henderson said.
As the advice sector moves into a new decade, Henderson is confident more advisers will turn to goals-based advice models.
“Goals-based advice isn’t exactly a new term, however, it addresses an issue that’s been around for a long time – namely, how can advisers link their clients’ life goals directly to advice strategies and their investment portfolios, and then track that to their own goal outcomes?
“Goals-based advice is designed to make the financial advice experience more engaging, relevant and meaningful to consumers. It centres the advice conversation around their goals. It helps a client to articulate what their goals are and structures their financial plan around these.”
However, Henderson conceded that the main problem the industry has faced, up until now, with goals-based advice has been the lack of suitable financial planning technology that makes goals-based advice an easy and interactive process for advisers and consumers.
But she added that this is changing, with the evolution of technology now allowing advisers to move from traditional paper-based advice offerings, to integrated digital offerings that are more client-centric.
“Goals-based advice is the future of advice,” she said. “ That’s because goals are meaningful and tangible to consumers. And ASIC is also in favour of goals-based advice, as RG175 clearly states that advice must combine a client’s objectives, current situation and future needs.”