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Four critical trends for wealth management: Online integration & more

Four critical trends for wealth management: Online integration & more | Cultural Trendz |


Online advisors won't kill the financial advisory industry -- but small and medium-sized RIAs may be left for roadkill if they don’t integrate an online model with their personal service offerings.

That’s one of the takeaways from a new report on major wealth management trends by CEB, the Arlington, Va.-based corporate advisory firm.

RIAs with under $1 billion in assets under management may be particularly vulnerable to online-oriented firms such as Personal Capital that provide mobile access to advice, guidance and account information, says Wallace Blankenbaker, a senior director at CEB who helped supervise the report.

“The new models most closely replicate the RIA who uses a custodian platform, but the firms like Personal Capital are putting everything online, making it cheaper and totally transparent,” Blankenbaker says. “I don’t think the big full-service financial firms who provide private banking, lending and insurance are going to be hurt as badly -- but independent wealth managers are going to have to up their tech game.”

The report identifies a few key trends likely to reshape the wealth management industry over the next few years. Among them:


The CEB report distinguishes between the online-only services often dismissed as "robo advisors" and firms like Personal Capital that “offer an individualized advisory experience online and target mass affluent and high-net worth investors.” That latter group is the real threat, the report finds.

Integrating the online and advisor experience to keep up with the competition and better engage clients will be a critical priority for wealth managers in the years ahead, according to the report.

And don't imagine this is a youth-market challenge: A CEB survey of high-net-worth clients found that while Gen X and Gen Y clients most favor a multi-channel experience, the trend toward digital engagement “spans across age groups.”

Specifically, more than 25% of retirees and 44% of baby boomers said they were comfortable with multi-channel access to their advisory firm.

To make digital integration work, wealth managers should emphasize online tracking and explanations of how a client’s personal goals relate to market benchmarks, Blankenbaker suggests.

“You want to make the information they can see and the conversation you’re going to have as relevant as possible,” he explains. “You want the client to see their own goals online, versus just their accounts.

"Real relevancy is establishing what the client’s personal benchmarks are and how they’re doing against them.”


As regulatory burdens grow, over three-quarters of wealth management firms surveyed by CEB last year said improving client onboarding -- the process of moving data from front to back office -- is either of critical or high importance.

New record-keeping, reporting and "know your customer" rules have had significant impact on the onboarding process, the study notes. To maximize the efficiency and impact of a compliant client onboarding experience, firms must invest in automating key steps in the process such as compliance and administrative tasks, the report says.

Such automation allows advisors to spend more time on client-facing activities. That's critical, because client satisfaction with account opening is very low, according to a CEB client survey; the firm's research shows that the first six months of a client’s relationship with a firm are when he or she is most likely to expand the relationship.

Firms should centralize the process as much as possible, Blankenbaker says, and try to implement an automated signature process so clients don’t have to make an extra trip to the office.


This one should be a no-brainer -- but, ironically, because financial planning is seen as cost-inefficient by so many firms, it is probably the “least used product” among wealth managers, Blankenbaker says.

Yet it's also the most important, he adds. And things are changing, according to the report: “Shallow client relationships, low plan penetration and proven benefits from planning are leading firms to redefine financial planning from a peripheral advisory tool to the core experience for clients.”

The benefits of including financial planning for clients include a deeper relationship, more referrals and increased wallet share, says Blankenbaker.

The time-consuming nature of planning has traditionally been a “barrier to return on investment,” the report notes. However, decentralization of standard plan creation, automation, innovation in reporting and simplification of client deliverables are now making financial planning “more efficient and scalable,” according to the report.


Most wealth management firms now have star specialists with technical expertise in areas such as portfolio management or planning, the CEB report notes. Increasingly, however, those specialists will need to be more well-rounded and able to build stronger relationships through client interactions.

“The most important competency in wealth management is having interpersonal skills, not technical expertise,” says Blankenbaker. “The industry is asking specialists to play more client-facing roles and have a more collaborative and client-centric relationship with their colleagues.”

“Strong emotional competencies” are critical for specialists being asked to become more involved in relationship management, the report states.

To insure that wealth managers have emotional intelligence and are able to relate to clients, firms need to reprioritize the way they hire, train and coach employees, according to Blankenbaker.

More personality-based assessments will be needed, he says, as well as training to help wealth managers become consultative and service-oriented.

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ING Goes Social: Rolls Out LinkedIn for Advisors

ING Goes Social: Rolls Out LinkedIn for Advisors | Cultural Trendz |

It comes as no surprise the adoption of social media has created many grey areas in the rules and interpretation of regulation and compliance. Social media profiles on LinkedIn or Twitter accounts can be seen as advertising for professional services, and in FINRA's view considered equivalent to a poster or flier that needs to be peer reviewed and documented by compliance officers.

A compliance officer must be notified of all changes to social profiles including "likes," endorsements, connections and comments. "That's one of the toughest things to deal with at large scale," says Bruce Milne, chief marketing officer at Socialware, a social business solution provider for regulated industries.

Due to the onerous archiving and compliance requirements the great majority of financial firms choose to stay out of the social sphere, but ING US (soon to be VOYA Financial) is taking on the challenge. In collaboration with Socialware, ING recently announced it will begin to roll out of LinkedIn profiles for its 2,400 financial advisors.

Strict Compliance
"We had a very strict policy in place," explains Ann Glover, chief marketing officer for ING US. "Our financial service advisors were not able to use LinkedIn until we could figure out a way for them to use it in a compliant manner."

Now, after a successful pilot with 10 users, ING is opening the program to a waiting list of over 100 advisors by year end. Word of mouth has spread quickly and Milne reports several inbound calls each day from advisors interested in joining the wait list.

From a business perspective, Glover says LinkedIn is an ideal place for advisors to manage relationships with current and prospective clients and to keep in touch as clients go through life events. "Only about 40 percent of the workforce is prepared for retirement," she says, "The direct demographic of LinkedIn is the target of ING, largely around preparing for a predictable and secure financial future."

Glover doesn't seem to worry about the chances of advisors being approached by recruiters who patrol LinkedIn for new hires, and says that because most of their industry peers do not allow advisors to use LinkedIn it is considered an attractive employee benefit.

Building the Guardrails
Unlike Facebook, LinkedIn's terms of service dictate users not have more than one account. Also unlike Facebook, FINRA's interpretation of LinkedIn is the site is intended for business purposes only. The actions of the users therefore reflect the opinions and recommendations of their firm.

Imagine, for example, an advisor has a laugh over an article about a survivalist who moves all their cash assets to gold and farmland, he hits "like" to share with his connections in good humor. A client could read that article and take the advice, however ridiculous. Legally there would be nothing to stop a client from going back to the firm and making a plausible case they received bad advice from the advisor. The same follows for a retweet on Twitter or repost on Facebook -- they are all motions of endorsing from the point of view of the advisor.

"You can't safely use "like" features with tongue in cheek," explains Milne. "There's no sense of irony in a like, so a lot of firm want to preclude users from using that feature."

To accommodate these unique needs of the financial service industry Socialware recently announced it has collaborated with LinkedIn to extend their programming interfaces, allowing firms to build guardrails that disable certain "risky" features. "We work with LinkedIn to act on behalf of our customers, advocating for the API published fields they need."

Through the interface, which acts as a proxy between the network and advisor, firms can publish a preapproved and recorded profile in full instead of going through the user interface line by line, saving time and stress for compliance. Disclosures can also be embedded into profiles that decrease the risk of participation. Depending on the firm's appetite for risk, guardrails may prevent users from making endorsements, which are also considered to be a recommendation by the advisor's company.

"When advisor accepts changes, makes an edit or presses submit, it goes in to compliance for approval," he explains. "Compliance need tools to make sure they aren't making unapproved changes to the profile, and they need a system to catch unapproved changes at enterprise scale."

One of the other things that's messy about LinkedIn and worked into the interface, says Milne, is you cant stop others from endorsing you, even if the skill is completely unrelated to the field. "It's a goofy deal that sets a lot of compliance officers off … We're working with LinkedIn so advisors and compliance can decline a skill. And if they are there we can suppress them so others can't see."

He adds that according to the regulations users can not be put out a compliance for a third party aspect. "If something is written on your wall that you don't like, nothing precludes you from deleting it, and nothing puts you out of compliance for having it there. It's neither your fault nor responsibility. They can go ahead and delete but it will be archived."

Pre-Approved Content
So what else can advisors do within the confines of preapproved liking, sharing, posting and endorsing?

As Milne puts it, you can't just send users out into the wild and hope they're productive. There are two essential elements to building an ecosystem around advisors: Support from readily available compliance officers who can approve posts in a timely manner, and a marketing team to create preapproved content for them to post.

"It's extremely efficient once you have a content machine in place," says Glover based on ING's pilot. "The social software enables us to populate preapproved content financial representatives can access. It makes it easy for the advisors to go in and click on what they want to post, and they can add a personal greeting."

It's felt preapproved posts help advisors participate in the conversations of the network. "This is part of a bigger effort to meet consumers where consumers want to be," she adds. "We want to be where the future is and our advisors have said they want to be participating in this great new avenue that's been opened up to them. It can help deepen business relationship and grow new relationships so we're very excited to be opening up that door for our financial service advisors."

Across the Industry
Socialware has worked with a number of financial clients including Morgan Stanley's 8,000 advisors' social profiles. Edward Jones had a large 3,500 advisor deployment now nearing 5,000, and Guardian Insurance now has over 3,000 users on LinkedIn.

ING's rollout is representative of most financial service firms, says Milne. He expects that given the positive responses from the pilot, and Glover's statement that they will not artificially delay anyone that wants to join, ING will be well over the initial goal of 100 advisors on LinkedIn by the end of the year.

Milne says the next step for the industry will be applying different sets of rules for different users, such as insurance brokers, wealth managers, bankers, and more. "All have uses for LinkedIn and other social channels but they are different uses and so are the rules that apply to them."

Vilma Bonilla's insight:

ING joins Morgan Stanley, Edward Jones, Guardian and other top firms deploying enterprise rollouts of @socialware.

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SEC may not flex Dodd-Frank muscle on Brokers

SEC may not flex Dodd-Frank muscle on Brokers | Cultural Trendz |

The SEC may not tighten the vise on brokers after all.

Under the 2010 Dodd-Frank financial regulation, the U.S. Securities and Exchange Commission has the option–but not a mandate–to require broker dealers to meet the same fiduciary standards as investment advisers when dealing with retail clients.

But comments from SEC Commissioner Daniel Gallagher show the SEC isn’t necessarily keen on enforcing these standards for brokers.

“At this point I’m not sure we have to use it. I’m not sure, quite frankly, that the majority of the commission believes we should use it,” Mr. Gallagher said yesterday on a panel discussion in Washington hosted by advocacy group the Financial Services Roundtable.

Mr. Gallagher added that the topic was “very much an open issue”, and that the SEC was concerned that new rules could have the unintended consequence of limiting investor choice, because broker dealers could scale back full-service brokerage accounts for retail investors.

The remarks come after the SEC last year asked for industry feedback as it considered standards for broker conduct in their work with retail clients, acknowledging that broker dealers have a fiduciary responsibility to those clients under certain circumstances, but not across the board.

Brokers are already regulated by Wall Street’s self-regulator, the Financial Industry Regulatory Authority, and the SEC.

In a 2011 report, SEC staff recommended two potential ways forward: writing new rules to create a uniform fiduciary standard of conduct for brokers and investment advisers in dealing with retail clients, or harmonizing rules for both to avoid confusion among retail clients.

Mr. Gallagher’s comments run counter to a vote by the SEC’s Investor Advisory Committee late last year to recommend the broker standard. The issue also underscored the complexity of regulators’ ongoing efforts to hash out the granular details of post-crisis regulation.

Even without new rules, Mr. Gallagher pointed out that the SEC still has the power to crack down on wrongdoing. It’s important, he said, for the SEC to bring more enforcement actions.

“Wherever there is money involved there are going to be bad actors, but there’s no one rule that can keep bad actors from that space,” he said.


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Understanding the female market

Understanding the female market | Cultural Trendz |

A recent study by Fidelity Investments found that 70% of widows fire their financial advisor within one year of their spouse's death.

Why would so many women dismiss the advisor who worked so diligently for their family, in many cases for years? Because they thought the advisor as condescending toward them. The advisor only held meetings with the spouse. In joint meetings, the advisor only addressed the husband, or made no eye contact with the wife, as if she had no say or interest in the financial security of the family.  In short, these widows felt overlooked and undervalued, and they had no trust in the advisor.

Besides the host of ethical reasons, there are some very important business reasons why you should never allow any woman client to think of you in this way. Some commonly quoted statistics tell a compelling story:

    Women will inherit close to 30 trillion dollars in intergenerational wealth transfers in the coming decades.
    Because women are likely to outlive their husbands, women will control most of this wealth, plus, they will inherit their parents’ wealth.
    57% of college graduates are currently women. Female college graduates are currently in control of more than 60% of the personal wealth in the U.S.
    22% of women currently earn more money than their spouse.
    Women make approximately 80% of their family’s buying decisions.
    89% of bank accounts are controlled by women.
    28% of homeowners are single women.
    45% of the millionaires in the U.S. are women.

In short, women are earning more, inheriting more, and controlling more wealth than ever before. This is a huge market awaiting every financial advisor, if he/she understands some key points about working with female clients.

I recently interviewed a female financial advisor, who has enjoyed a very successful career for more than 20 years.  She runs a firm with several other advisors, all of whom are women. This is not a coincidence; it is by design.  She only hires females, primarily because she works exclusively with female clients.  She decided many years ago that focusing on female clients would be a very smart way to build her career.

When she was in her teens, she observed her mother making virtually none of the financial decisions in the family, almost as if it wasn’t her role. Furthermore, her father rarely shared financial investments, insurance plans or any form of estate planning with her mother.  Consequently, when her father died, her mother was frozen with feelings of helplessness, did not understand the details or nuances of her financial situation and felt very depressed and anxious as a result.

As an aside, when I was a psychologist in the U.S. Air Force during the VietNam War, one of my duties was helping the wives and families of servicemen killed, captured or missing in the war.  I was shocked at the high percentage of women who had absolutely no idea about any of the financial plans or arrangements that their spouses had prepared before departing for overseas.  Most didn’t even know where to find the paperwork or the names of insurance companies or brokerage firms that their spouses worked with.

So, this advisor decided early on that she would find a career to help women, so that her clients would never find themselves in the position her mother was in.

Some male advisors have problems dealing with female clients because they have a general problem dealing with women. Sometimes males have stereotypical views of women and finances, such as "women prefer to leave financial decisions to men," "women are too emotional and base financial decisions on their emotions at the time," and "women are impulsive and may make financial decisions they later regret."

To all the men reading this: If you maintain any of these ideas about women, perhaps working with female clients isnot something you should consider - unless you plan to engage in therapy or group sensitivity sessions about the differences - and similarities - in the sexes.

You’ve probably heard that money problems are one the most significant factors that lead to divorce. Dr. Sonya Britt, an Assistant Professor in the Institute of Financial Planning at Kansas State University collected interview data from 4500 couples who had gone through divorce and the data showed definitively that the #1 factor in causing the divorce was money issues.  Many couples exist with money issues as a taboo subject, with women leaving financial decisions to the males in their lives, in order to avoid controversy.

Recently, Allianz Life reported the results of an eye-opening study (The 2013 Women, Money & Power Study) they conducted, where they surveyed more than 2,200 women between the ages of 25 and 75, with a minimum household income of $30,000 per year. There were several remarkable discoveries.

Two thirds of married women are concerned about leaving all of the financial decisions to their spouses and 57% of all the women say that they handle major investment decisions and retirement planning themselves.

Almost 50 % of all of the women surveyed fear losing all of their money and becoming homeless. Even a third of the highest earners ($200,000+) have the same fear. The authors suggest that this points to a deeply held type of financial insecurity that is not an issue with males, in general.

Perhaps because of their fears and unmet needs regarding financial security, women in general perceive that the financial advising industry is oriented more toward serving men. Large percentages of these respondents feel alienated by this industry and 62% of the women express an interest in learning more about finances and retirement planning, yet the same percentage of women do not have a financial advisor.  Many view the Internet as the most reliable source for making financial decisions.  There is a huge opportunity to educate and help women, who command a such a large percentage of the wealth in this country.

Dr. Jack Singer is a professional sport psychologist, speaker and trainer, primarily for financial professionals. Visit his website at or email him at:

Vilma Bonilla's insight:

Very compelling reasons not to undervalue female clients.

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