Staying Ahead

Editor’s Note: Joel Bruckenstein, our technology writer, recently interviewed Neesha Hathi, senior vice president of Advisor Services Technology Solutions at Schwab Advisor Services, about ways advisors are changing the tools and approaches they use to serve a more diverse group of clients.

FA: Can you briefly summarize some of the changes you see taking place in the industry?

Hathi: We spent a lot of time at IMPACT trying to help bring light to a lot of the trends that we see. Many of these trends are not new, but it feels like those trends are intensifying. It also feels like advisors are starting to respond to them.

More advisors are thinking about mobile apps, and portals, and that client experience. We are getting great adoption on our electronic authorization and some of the newer capabilities that kind of bring new technologies into the mix. So it feels like advisors are starting to take note.

We are getting a lot of requests for the Schwab Intelligent Portfolio platform as well. We are getting requests from advisors who are really interested in understanding more. They are excited about this opportunity to leverage a platform like ours and address a segment that either they are serving right now without necessarily the right business model or they have been kind of deferring to other firms. Now, they have a chance to address this more directly.

One of the areas that we are starting to dig into that might be interesting for your readers is the advisor. If you take a look at the RIA industry, it is comprised of principals who have been in this industry for a very long time; they are the founders of the industry.
But there is this next-generation advisor that is coming in, whether as a successor, or maybe the son or the daughter taking over the business, or someone pulled in from a wirehouse as a potential successor. The way the next generation thinks about the industry and platforms might be quite different than the way that the founder of the firm did.

FA: Yes, this is an interesting topic.

Hathi: We are digging in there a little bit more—first of all, getting the numbers and the data. But also, then, are the implications for the adoption of technology and might there be some acceleration … not only because clients are demanding it, but also with these newer generations of advisors coming in.

FA: That’s a good point, which hasn’t really gotten a lot of attention.

Hathi: Yes, we have firms that bring in someone, and all of a sudden they are interested in leveraging technology. Before, they never asked us a question about it. But it does seem to be accelerating.

FA: What are consumer expectations, how are they changing, and how is it impacting the industry?

Hathi: The consumer is changing, so the consumer expectation is changing partly because the identity of the consumer is. You know the growing control of wealth that women have. I think we’ve quoted before the $22 trillion in private wealth in 2020, which is only five years away, we anticipate 50% controlled by women. The fact is that 44% of married affluent women outearn their husbands.

The consumer changing certainly has big implications for the way that advisors need to serve them. Some of that influences how we think around the composition of most advisory firms. You probably heard about our RIA talent advantage initiative?

The idea behind the talent advantage initiative is to help advisory firms prepare for next-generation talent to bring into their firms. A part of that is, to serve this new consumer you need to have folks in your firm that actually reflect the population you are trying to serve, and so that means more diversity in gender, more diversity in culture.

FA: That sounds reasonable.

Hathi: We’ve also been talking about this notion that more and more investors are expecting a more holistic view, and I think advisors are well positioned. I think they have seen this coming. They have been participating, getting more into data aggregation, and trying to think about that whole holistic client view. But it feels like that trend is accelerating because investors can get that themselves.

FA: Go on ...

Hathi: You can go open up your [Mint] account and get that kind of aggregated view. So consumers are expecting that more and more from advisors … that holistic view, transparency, the real-time anywhere, anytime kind of thing. And then the last one that we often talk about is personalization. Again, I think for RIAs the trick here is that they are really good at personalization, but they’ve done it in—they’ve thrown their effort and their bodies against that personalization. They haven’t figured out necessarily how to scale it.

FA: What should advisors be thinking about with regard to personalization?

Hathi: Advisors need to think about how to keep the high touch and that really personalized feeling but be able to serve more and more assets and more and more accounts and households.