Tech innovators know they are “cogs on the wheel” and a component of a bigger picture, namely householding.
• Data aggregation is vital. Collecting data creates a client statement and informs a plan, but the data doesn’t coordinate or optimize itself into a household portfolio.
• Planning tech provides guidance on how investors can reach their goals. But planning tools don’t provide step-by-step, trade-by-trade actions to optimally address risk and tax, the real levers required to improve outcomes. Planning doesn’t quantify or prioritize the next best thing to do.
• Risk scoring creators know they are much more than a marketing tool. Risk tools help advisors and clients understand the investor’s comfort zone.
• Tax optimizers consider asset location, tax-loss harvesting, household-level rebalancing and multi-account income optimization but not if they’re not connected to the data, the plan, the rebalancer and understand the risk appetite.
• Social Security tools usually suggest investors delay taking benefits because the government gives an 8%/year increase between 62-70. But how do you build a coordinated income stream before and after Social Security benefits kick in?
The Netflix version “streams” all the above on a coordinated platform to optimize and maximize cost, risk, tax and Social Security to produce improved outcomes. This will be achieved through a series of steps that will be quantified and prioritized for the best results possible. Fintechs and wealth managers are working together to meet these challenges and develop advice platforms that are as personal as they are scalable. But this isn’t some new fangled robo (remember them?). All this can only be accomplished as advisors harness technology and provide the guidance necessary to make smart decisions as life circumstances and markets inevitably change.
I started working on this 20 years ago. I am happy to report householding is now available and creating big wins for investors and advisors with more on the way, and fast. You have most of the necessary tools. Now it’s time to work with your tech providers to coordinate and implement next best actions to improve outcomes for your clients and for you.
Jack Sharry is co-chair of MMI's Tech & Ops and Digital Advice Community, on the The Next Chapter Advisory Council and executive vice president of LifeYield. Learn more at www.LifeYield.com.