Barron’s Top Independent Advisor Summit: Advisors Must “Trust In Innovation” To Thrive


In Stanley Kubrick’s 2001: A Space Odyssey, astronauts explore deep space in a ship controlled by the artificially intelligent supercomputer, HAL 9000, represented in physical form by a haunting, omnipotent red camera eye. HAL seems flawless by design, managing much of the ship’s operational functions and leading the astronauts on their mission with ingrained determination. Suddenly believing the astronauts might disrupt the mission, HAL becomes consumed by human-like paranoia, beginning a mutinous plot to kill all on board.

Almost 50 years since the release of that film, Charles Schwab has aired an ad campaign for its new “robo advisor” platform, Schwab Intelligent Portfolios, a digital system that collects investor-inputted data and preferences to establish diversified portfolios. In the commercial, a square monitor filled with blue pulsing light represents the system’s physical form, as a soothing voice explains its powers. It can monitor and rebalance, the voice says, all without commissions, advisory fees, or account service fees. Then the voice offers a gentle reminder: “That may be hard to compute, but I’m a computer, so trust me, it computes.” In all its subtle physicality, that oscillating blue monitor recalls the glowing red eye of HAL 9000, heralding a brave new world for the financial industry and the culture of consumerism.

On March 23rd through 25th, we joined a few hundred of the country’s best financial advisors in Scottsdale, Arizona for Barron’s annual Top Independent Advisors Summit. From the start, meeting rooms buzzed in anticipation of robo Barron’s Top Independent Advisors Summit Advisors Must “Trust In Innovation” To Thrive 2 Barron’s Top Independent Advisors Summit / CONWAY WEALTH GROUP April 7, 2015 advisory’s disruptive—possibly destructive—role in the future of the industry. Barron’s predicted such discussion, centering its theme for the year on the prevalence of new technology and the need for drastic overhauls to the way advisors approach servicing their clients. Big hanging banners, glossy printouts, and reputable industry speakers urged the attendees: “Trust in innovation.”

At the start, presenters labored to garner that trust from a crowd of successful advisors, many of whom built businesses over decades in spite of innovation. Many arrived with a preconceived aversion to robo advisory and a disdain for its market cannibalism. Others scoffed, disparaging the product as a passing fad for Millennials. They had no trust because robo advisory, they thought, could only succeed if consumers themselves could trust technology with their wealth. After all, HAL 9000 killed the astronauts, and the new Schwab system’s resemblance was uncanny. Yet every advisor in the audience listened intently as speaker after speaker declared the universal importance of the message: “Whether or not you have begun to trust the real value of the technology, trust that technology will continue to grow exponentially among consumers and in all aspects of our lives.”

One by one, presenters on the main stage and in breakout sessions addressed all misconceptions about the role of technology in the future of the wealth management industry. They derided the pervasive notion that robo advisory might exist only for a particular type of consumer—predominantly Millennials. That perception, they said, could prove to be a fallacy of considerable consequence. While typically thought of as something palatable only for younger generations, robo advisory customers are broad-based, including convenience seekers, tech junkies, introverts, and early adopters, all of which exist among every age (and wealth) level. Many advisors heatedly cited studies that prove a fairly low percentage of the wealthy use standalone robo advisory services. But as many Barron’s presenters explained, studies from a month ago are no longer valid amid exponential growth.

If not skeptical of value in technology, many advisors were simply fearful and angry about the chunk of the market robo advisory has begun to consume. The conference theme—to trust in innovation—also advocated for advisors to accept, embrace, and harness innovation. Simply, advisors can’t fear technology, but must leverage technology for the benefit of firm growth and client satisfaction. While robo advisory will continue to expand, advisors can choose to grow in tandem by building robo capabilities—or other digital platforms—into their own practices. As advisors’ clients continue to age, leveraging technology can help capture a different piece of the market, provide a simpler and more effective service, avoid client erosion, and establish firm legacy. While an advisor might not yet fully trust or value the technology, inaction and hindsight will reveal a rather bleak reality in the not-so-distant future.

Many of the breakout sessions also assured advisors that trusting and building technology into a practice doesn’t equate to an admission of defeat to new robo overlords. In fact, many presenters acknowledged the continued need for the “human touch,” especially for the sake of eliminating omnipresent fear and greed among investors. For now, robo advisors allow for the possibility of investors making drastic and destructive investment changes based on the desire for greater returns or the hope to avoid greater losses. And for now, great (human) advisors are best equipped to ensure clients avoid these very common pitfalls. True advisory will remain a critical element to the most successful investing for many years. In one particular presentation, Vanguard quantified the value of the human interaction (“the advisor’s alpha”). Without an advisor in place, the presenter explained, investors were missing out on an additional 3% in returns per year. Human guidance—true hands-on coaching in all aspects of a client’s financial and personal life—constituted the largest piece of that increase.

While many presenters emphasized the importance of capitalizing on robo technology, others discussed how to leverage other new age tools. For example, properly implemented customer relationship management (CRM) platforms have become increasingly important to create more efficient sales practices and more accessible client experiences. Presenters also explained how tech advances in communication—through advanced email platforms, advanced website capability, text messaging, social media, interactive software, SMART board presentations, videoconferencing, etc.—all help establish greater credibility, CONWAY WEALTH GROUP, LLC is owned by Michael W. Conway who offers securities and investment advisory services through Summit Equities, Inc., Member FINRA/SIPC, and financial planning services through Summit Equities Inc’s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600 Fax 973-285-3666 Direct Office Tel. 973-285-3640 market presence, client accessibility, and responsiveness. More importantly, advisors will begin to appear ill-equipped without digital tools in the future. Great standalone wealth management will no longer suffice as client preferences continue to shift toward efficiency. Many of these platforms also drive massive efficiencies, allowing practices to actually scale down resources and become more nimble and more capable in the digital age. As an example of such scale, the presenter offered the following quote from a TechCrunch article by Tom Goodwin, titled, “The Battle Is For The Customer Interface”:

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”

Despite the inherent mistrust, fear, and even anger toward the digital age, many of the advisor attendees had established a consensus by the end of the conference: Naysayers will be left behind. Just as HAL 9000 killed off the astronauts, advances in technology like Schwab’s Intelligent Portfolios could diminish traditional advisors unless they begin to trust, embrace, and harness innovation. In one of the final breakout sessions of the conference, the presenter clicked on her digital presentation to reveal the fate of naysayer advisors. In Word-processed letters on a shimmering screen, a quote from former U.S. Army General Eric Shineski stood in bold: “If you don’t like change, you’re going to like irrelevance even less.”

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