Tech is the Problem—And May be the Solution

By Bob Veres

It seems like all we can talk about these days is tech. The advisors I talk with will complain about it, or wonder where it’s taking us, or worry about whether, somewhere down the road, it will start to replace them.

It’s easy to understand the complaints. According to the data collected in our T3/Inside Information Software Survey, the average advisory firm currently depends on 14–17 different individual solutions—compared with fewer than seven a decade ago. Today’s tech stack is far more powerful than it was in those simpler times but it’s also in danger of metastasizing out of control as the AI-driven pace of change speeds up.

What Has Changed

“Managing technology” has quietly become a required job function in the profession, and I suspect that most advisors feel like they’re not keeping up or getting the most out of what’s available. Who has the time?

Add to that the cost of switching systems. The fintech world is starting to see a bifurcation between firms that are moving ahead with new and better features, and others that regard their tech licenses as annuity income; they’re complacently relying on inertia to keep their users from leaving for greener pastures. Morningstar Office was a great example of this for more than a decade before its lack of innovation became so obvious that it had to shut the doors and invite everybody to move on.

“Moving on” requires the laborious process of evaluating the competing vendors, transferring client data (with fingers crossed), and then retraining staff on all the features of the new system. It’s not for wimps, which makes inertia (and lack of progress) a very real force to be reckoned with in the fintech landscape. Newer, better solutions face a steep uphill battle to dislodge even dissatisfied customers to their platforms.

What Comes Next

Which brings us to the “where is it all going” question. If you extrapolate the most recent decade of progress out indefinitely, you might think advisors will just keep adding more and more individual pieces of tech to their business ecosystems, which will continue to get more complicated and overwhelming. Meanwhile, all the better solutions will be relegated to marginal market share because nobody is willing to evaluate, transfer, and train, over and over again, with more and (hopefully) better tech.

Based on what I’m hearing from the tech vendors, I don’t think we’re heading toward that gloomy future. AI is going to save us.

AI is coming to the rescue in a variety of ways. The first and simplest is the new AI interface technology that EVERYBODY is working on. 

In the past, as in yesterday, if you switched tech, that meant every user—which in some firms could be hundreds of people—had to learn how to navigate a new series of drop-down menus and clunky UX interfaces that take years to master.

In the future, as in tomorrow or the next day, users of a new fintech solution will be able to tell the program what they want it to do in natural language. If they’re uncertain how something works, they’ll be able to ask. We saw a few examples of this at the T3 conference, and in the demo sessions I saw other fintech executives taking notes. But really all this requires is a lot of built-in prompt-engineering on top of one of the large language models: if they ask about this, then confirm what they want to do, and with confirmation, go to this item on the drop-down menu and execute this task…

AI is also beginning to solve the data conversion challenge. We already have a new program, called Dispatch, that will map the data fields from the leading CRM solutions to the comparable fields in the leading planning and asset management programs simply by selecting the icons from a screen. It doesn’t map to specialized programs like Holistiplan or Income Lab—yet—but those integrations are on the horizon. In a demo, I asked whether an advisory firm that is dissatisfied with its current CRM could subscribe to a new one, put both into the system, and populate the new CRM with the data from the older one.

The answer was: Why not?

It won’t be long before the software companies themselves will use AI to speed up conversions from one set of data fields to their own, with greater accuracy.

A Better Tech Landscape

The result will be a much more fluid tech landscape, with less inertia—meaning fewer hassles involved in replacing older legacy software with newer, more innovative solutions. The 15–20 different programs in your tech stack will be integrated, will confer with each other over how to sequence tasks in your workflows, and will be much easier to manage and replace.

This new fluidity will also impact the custodial marketplace—which has traditionally been the stickiest tech relationship, because a switch means (ugh!) repapering clients. Since COVID, we have seen a revolution in automated form-filling solutions at the more tech-forward custodians and even built into the note-taking programs. Repapering now means filling out an online questionnaire, having the software map the response to the paperwork, and having clients provide digital signatures.

If a custodian doesn’t keep up, it will be far easier to replace it with others that are embracing the AI revolution.

And finally, down the road, the fancy new tech, fueled by AI features, will replace advisors, and our conference panel discussions will feature three terminals set on chairs, with another terminal set atop the lectern asking questions—right? (The keynoter would be a mainframe.)

My assessment is that today’s next-gen advisors will have grown long white beards long before AI becomes capable of evaluating the myriad complexities of human clients—their messy lives, their complex psychologies, and even how their financial situations interface in real time with the ever-changing tax and investment regimes.

And even if those challenges are met, AI will have a bigger hurdle to overcome: the ability to win trust, to reach across the table and take the client’s hand and say with confidence that everything is going to be all right. The tech stack, no matter how it evolves, will continue to leverage the expertise of financial planners, not replace them. 

 

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Bob Veres is the publisher of Inside Information and one of the strongest advocates of Fee-Only planning in today’s profession. If you think his columns are full of the stuff that hits the fan, tell him so directly at bob@bobveres.com.

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