HD Vest Financial Services is rolling out major upgrades to its technology that the firm hopes will fix some long-standing shortcomings to its investment and planning platform.

A series of new launches will be completed this year, Vest officials told nearly 1,000 Vest-affiliated advisors at the firm’s annual meeting in Denver this week.

The $4 million upgrade may not seem like much compared to what other firms spend, but “we’re creative with how we spend money,” Vest chief executive Roger Ochs told Financial Advisor.

The firm is also implementing a revamped marketing campaign developed by chief marketing officer Ruth Papazian, who joined Vest a year ago.

Redesigned materials play up the idea of offering “tax alpha” through tax-loss harvesting, maximizing retirement plans and estate planning.

Vest’s 4,500 affiliated advisors, whose primary business is tax preparation, work out of 4,000 offices nationwide.
The changes are part of a growth plan devised by Ochs, his team and the firm’s private equity owners,  Parthenon Capital Partners, Lovell Minnick Partners and Fisher Lynch, which bought Vest in 2011 from Wells Fargo & Co.

Fifty of Vest’s top advisors also own stakes in the company, Ochs said.

So far this year, the business is on track. Through May, Vest had $123 million in revenue, up 10.4 percent year over year. And the firm hit a record $36 billion in total client assets, $9 billion of which are fee-based. New assets year-to-date were more than $800 million, up four percent.

The tech upgrades will enhance Vest’s tax-driven planning model used by its advisors, officials said. The model analyzes clients’ tax returns, identifies planning issues, and then implements with investments and insurance.

The hub of the new tech platform is called Vest 360, a CRM-like system that will aggregate data and pre-populate other programs so Vest advisors will no longer have to re-enter client information.

Direct business -- funds and variable annuities held at product sponsors -- will also reside in the system, thanks to a deal with DST Systems that promises to improve the accuracy of that direct-business data.

The new Vest 360 program was launched this week.

On June 13, Vest advisors will see the upgrade of their main planning tool, 1040 Analyst. The tool takes data from four of the most popular tax software packages that Vest advisors use, and analyzes it to identify financial planning needs.

“It’s the 1040 Analyst we’ve had for the last 30 years, only on steroids,” Ochs told advisors at the conference.

The Vest system will also pre-populate Vest’s Envision planning tool with client data. The tool has been upgraded and rebranded as VestVision. The new version eliminates a “clunky front-end process,” Ochs said, and includes Vest’s own capital market assumptions and model portfolio allocations that advisors currently must input manually. A launch for the new planning program is set for July.

Vest advisors are most enthusiastic about improvements to the new-account opening process.
Firm officials plan to rollout by year end a wizard program that will eliminate the need to use up to four separate systems to open brokerage and advisory accounts.

Advisors “will be able to go through the account-opening process with one fell swoop,” Ochs said.

The firm hopes advisers will continue to use its VestAdvisor Select investment platform with a set of model portfolios that advisors can use off the shelf or customize. The Select investment platform was launched a year-and-a-half ago and now holds $1 billion in assets.

Assets will grow quickly if Vest meets its recruiting goal of 700 new advisors this year, double the number landed last year. Ochs thinks he can do it with the marketing improvements Papazian has made.

Papazian, who previously ran marketing for LPL Financial, has dumped the firm’s traditional direct-mail approach and replaced it with targeted online advertising, white papers and more sophisticated tracking of prospects, Ochs said.

“We have an experienced recruiting team with a [new] CRM system so they’ll be much more professional about recruiting” and follow-up, he said. “We’ll have better prospects and a have a better profile on them.”

Ochs adds that the firm’s primary market of tax preparers is huge -- 220,000 CPAs and enrolled agents who don’t have a securities license.

He figures the ongoing upgrades to the Vest platform “will resonate” with that target audience, which is challenged by the commoditization of tax work and bookkeeping.

“They don’t have to prospect for clients. It’s just a matter of converting their existing [tax] clients,” Ochs said.

“It’s a brilliant business model, unique to industry,” Papazian added.

The biggest hurdle is convincing both existing advisors and recruits to devote time to planning and investments. “We’re asking them to take on another job, and unless we make it easy for them, they fall back to what they know -- doing taxes,” Ochs said.

Vest advisors say most of their peers in the tax-prep business also hate the idea of selling anything.

But that may be changing. Papazian says the top three advisors at Vest focus completely on investments and supervise others who do the tax work.

To get tax people over the hump, Vest supports 110 advisor chapters around the country, led by a local advisor who follows a training curriculum provided by the firm. A mentoring program helps new advisors get going. Leaders of the programs get a small amount of financial support from Vest, Ochs said.

With the help of the platform upgrades, Vest advisors may be able to help the company -- and each other—realize the potential in wealth management.

Advisors at the firm “are really looking to help each other out,” Papazian said. “It’s a very different culture than most broker-dealers.”