The Modern Custodian’s Pledge: To Serve, Not Control
To help advisors move toward a digital, frictionless future, modern custodians should provide advisors with a platform designed to serve, not control. It should be a platform that will facilitate – not dictate – the relationship between advisors and clients. Nor should the modern custodian offer only pre-packaged, off-the-shelf solutions.
Instead, the modern custodian should provide the digital platform supporting customizable tools and technology that enable clients to save, spend and invest their assets in a completely original model of the advisor’s design.
The modern custodian isn’t central to the relationship between advisor and client and doesn’t want to be. There should be nothing standing between the client or advisor and where they put client money: the asset manager, ETFs, mutual funds, or individual stocks.
To be sure, developing real-time digital dexterity demands an upfront investment in technology and tech-savvy staff, but it will pay attractive dividends over time. Not only can advisors handle more clients and spend less time doing so, but their practice will benefit from greater operational efficiencies.
For example, compliance and other back-office tasks can be standardized, with pop-up reminders when updated paperwork or action is due. And advisors can customize and tailor targeted communications such as blogs and educational messaging to keep their clients informed, and videos that resonate with their touchpoints. Most important, customized digital functions can attract and retain a loyal NextGen client base that will drive higher practice value.
To power their transition to digital services, advisors should begin by creating a timeline to upgrade their digital capabilities, based on the firm’s growth strategy. This includes defining goals that focus on what their clients need, and the technology required to serve them.
Then, advisors should select a provider with a record of building innovative and integrated solutions that have helped advisory firms transition to digital efficiently and profitably. Through digitalization, among other things advisors want to find ways reduce costs, comply with regulations, and aggregate data.
The basic services clients expect to receive from a digital experience range from receiving information, including portfolio updates and research, to executing transactions, transferring money, and holding meetings with their advisors.
The industry is still in the early stages of this digital transformation, but it is moving in the right direction. Because it’s becoming clear to everyone that frictionless means more – better and faster – for everyone.
Bill Capuzzi is the CEO of Apex Clearing, a digital custody and clearing engine powering fintech disruptors and attempting to drive modernization in the financial services industry.