“You can […] simply tell when spending categories or transaction types have changed in such a dramatic way. You can set a pretty hard threshold for what dramatic is, and then that threshold probably adjusts over time. It’s pretty easy to tell when something’s happened.”
When Lowell talks about the company’s future, balancing current client demands with longer-term priorities is a constant challenge.
“There’s a constant balance between a long-term roadmap, which is where we think the industry is going, and a more short-term roadmap, which is very much client-driven. Our sales engineers serve a dual role here. One is explaining the technical aspects of the platform to prospects and clients, but also soliciting feedback throughout the sales process, [the] onboarding process, so that we know where […] our platform [is not meeting] someone’s needs today, what we can do to build something, not just for one client but for many clients.”
Future expectations
Lowell does not have a clear prediction of how wealth management will evolve in the future.
“Is it possible for automated solutions to completely replace the human element of wealth management? Yes, but not for a very long time. I think that the power of technology to replace the human touch asymptotically [will approach] 100% over time. The question is where we are along that curve?”
One of the most serious impediments to replacing the human component is the need to answer customers’ difficult questions, which requires research into the customer; indeed, most such questions have no clear black-or-white answer. The same is true regarding the US taxation system—it’s too complex.
“I think that today it’s very, very difficult to build an algorithm to actually navigate the tax code, especially since it changes on a regular basis.”
This is why Lowell believes that human advisors will not be eliminated any time soon. Nevertheless, young people may cause a significant shift in the industry.
“I think the need for the psychological component decreases as the services themselves get easier to understand and more comprehensive in an automated way. I also think that the changing demands of the consumer are really interesting. We’re midway through this massive wealth shift towards a generation that has different expectations of service.”
That generation prefers automated solutions and has very low expectations of human touch.
Active and passive management
Lowell believes that although active management does not outperform passive management in the down markets or up markets, over a long period of time passive management outperforms active management.
“I’m a deep believer in Jack Bogle, when he says that the stock market in the long run reflects the economy. And as a result there is no way to [“beat the market”…] just invest in the market.”
Though Lowell recognizes that he started in a business that was based on active investing, in the past 10 years he has changed his opinion.
Interviewed by Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech & Java engineering company. Vasyl is also author of the WealthTech Club, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.