“In five years, there will be robos live on their own or they will be swallowed up by some of these larger asset managers or broker-dealer firms.”

Firms like Vanguard offer inherent benefits due to their size and scale, so they are able to reach out to people. The bottom line is that if they can deal directly with the end investor, it’s to their benefit. That’s one of the interesting dynamics that we have yet to see unfold.

Cooperation between financial institutions and FinTech

If you look at Invesco buying Jemstep, it’s about a build versus buy decision. There are now so many niche FinTech solutions that serve one very specific market need. On the asset-managers’ side, however, there are definitely more buying-whole-solutions scenarios.

Other firms are beginning to put together these very discrete FinTech companies to offer more of a well-rounded solution. At the end of the day, when you think about the challenge for the advisor, not only are they running a book of business, but to a certain extent they’ve got all the fee compression challenges, too. Matt feels like at the advisor level they have to make a decision about their value adds.

If their value add is going to be to work with clients and doing financial planning, or is focused on investment selection, or emphasizes something else, all these have implications on the technology that the advisor actually implements in their practice.

The challenge of using big data and analytics is two-fold.

First, there’s never been more data available but second, if you look at advisors at their practice level they have to not only handle more clients with more assets, but also figure out a way in which they can automate their workflows to be more productive.

There’s definitely a role for technology like that, that traditionally hasn’t been employed in the financial services space. If the advisor can be more efficient and can outsource some of the manual tasks, whether it’s monitoring client portfolios, making sure that the client’s investment policy statement aligns with the proper investments—anything that the advisor can do to help automate their practice and allow them to spend more time with their clients is something that they’re going to be very interested in.

“With big data and AI, we’re just at the very forefront of what the potential might be.”

Furthermore, applying this emerging technology can help us to understand what story the data is telling, and how that helps clients.

“So making the data actionable is one of the keys because [as of now], many different formats and sources are there but if you can’t make [data] actionable, then you’re going to go into data overload.”

Fiduciary Focused Toolkit and the Fi360 Fiduciary Score

Fi360 was founded in 1999, long before the Department of Labor rule or any regulatory pressures were in place. The firm was launched to bring a fiduciary standard of care to investors. The outgrowth of that was a lot of research, but Fi360 literally published the book on a prudent investment process and took case law and legal regulation and translated that into a four-step prudent investment process.

That is the basis of what Fi360 calls its designation, which is the Accredited Investment Fiduciary® (AIF®). Once that came out, advisors went through training and loved it. This helped them achieve better outcomes for the clients they served, but when they went back to their practice at the end of the day they did not have a technology solution that allowed them to implement that into their practice.