Sadly: Sales. I would love to say “service” is the most important, but the numbers behind “happy clients are the best drivers of growth” don’t paint a great picture. Clients (happy or not) generally don’t talk about their wealth advisor or experience. It’s probably down on the list with proctologists and undertakers for “professional relationships I’m most likely to talk about at a cocktail party.” That doesn’t mean you can ignore your clients: Much growth can be made from what we call “wallet share accretion” and using tech/aggregation to achieve that (we have a number of clients who have been successful doing this). But Sales is still a huge driver of organic growth.
Is there a Fintech talent shortage in the United States? According to our study, Fintech will need more than 200K IT talents in 2020. There will be three vacancies per Software Developer. Do you agree that filling positions is hard? What experience should your talents have to be able to implement complex digitization solutions? Why?
I’m skeptical about the gap. While it exists, I think we’re also in an economic and funding cycle where many Fintech firms are going to be forced to be profitable or find an alternative way forward (M&A or closing down). In my 23 years in the industry, I’ve seen two “mass Fintech extinctions” where great firms were unable to maintain their growth and had to significantly down-size, sell, or close their doors. The same thing is almost certain to happen again as the market contracts.
Which companies/technologies/features have the greatest potential to disrupt the WealthTech market nowadays? Why?
If we’ve seen anything over the last 10 years, it’s that technologies’ ability to “disrupt” is almost always over-blown. That said, there is one change in the marketplace I believe will drive significant differences in how advisors and clients experience their wealth: Direct Indexing. It has the potential for certain firms (those that have invested in their data and modern portfolio construction/execution/management tools) to drive significant cost savings and deploy more comprehensive/complex portfolios down market. It’s still a long way off, but if I were an asset manager with fund or ETF distribution as a critical part of my revenue . . . I’d be worried.
In five years, what success criteria are the most likely to change? Is there a tendency that is overlooked or simply underrated by the media, in your opinion?
I think five-year success factors will come from firms that are able to translate their value and connect their clients to their wealth in a more impactful, personal way. This concept wraps together great digital access and insight, wealth SRI/ESG, goals-based reporting, and great investor content and “research.” The buzz word is probably “experience,” but it’s really what we should be doing as an industry: Facilitate a relationship between clients and their wealth.
As we know, you have worked with so many companies from our WealthTech Club members’ list, for example with Capitect, MyVest, and FutureAdvisor. What was your contribution to their digital transformation success?
Good question. Our work with the Fintech community has always been in helping them align their products with the needs of our wealth clients. In that way, we’ve helped both sides: Better selectable products correlate to happier and more successful wealth clients! In some cases, we helped them transform their sales/messaging. In some other cases, we helped them understand where they fit in their competitive landscape so they can tailor the message to fit the need.
In what way can you help other wealth management companies following the club to grow? Can you give them a bit of advice about how to become more successful at digitization?