Hanson: The idea of States regulating advisors scares me because I was registered through the State for years and I never saw or heard from anybody. I don't know why we have a dollar number as the threshold as opposed to some other criteria or maybe a combination of some criteria.
DePina: I agree with Scott and Michael that one of the key catalysts of consolidation amongst advisors will be firms hitting a limit in terms of scalability, which will impede their ability to be profitable. Investors are confused with regard to which advisors are holding themselves to a fiduciary standard or not.
They don't know enough to ask if someone is registered by the SEC or by the State. Many investors are not going to flock to those entities for advice if they think the states are providing inconsistent regulation, which will likely occur as a result of 50 jurisdictions providing different forms of oversight.
Langdon: Unless there's something besides just pure registration that is not in some way transparent to the consumer, it's a moot point.
FA: Let's tackle this whole thing about scale and technology and the size of the practice. How is technology changing the way advisors work and build trust?
DePina: What's preventing many firms from taking their efficiency to the next level is the lack of true integration between disparate systems that comprise an advisor's technology ecosystem. When a client calls in with a request, you don't want to say, "I'll have to get back to you," because that doesn't support one of the first tenets we spoke about-trust.
Advisors are now looking to integrate their back-offices to drive new levels of efficiency and customer service. And custodians in turn are leveraging their reach, saying an integrated system will enable advisors to easily take action on certain transactions on behalf of their clients, generate performance reports that clients can understand, provide clients with the transparency, and clearly communicate information.
Technology has three pillars in what it should do for an advisor. First, technology has to help an advisor support his or her client, plain and simple. The second involves efficiencies around regulatory issues. Can your technology help alleviate the pain you have when dealing with regulators and some of the other compliance work that you need to deal with? The third pillar-the most important-is profitably. Those are the issues that we're seeing the best-managed firms address when they think about technology.
FA: Michael, in terms of the way you built trust through the market downturn, did anything happen that was different in your practice? Did you see an erosion of trust? How did you shore that up with your clients?
Kay: What this whole concept of building trust comes down to is really very simple. It starts with understanding your clients' expectations. If you understand concisely what your clients expect from you throughout the process of working with them, and you are able and willing to deliver on that expectation, all you have to do is fulfill it.