As an ardent technologist, Alison Dooher, managing director at Schwab, is happy to note advisors are putting greater importance on tech tools in their practice.
There’s a growing list of reasons why, Dooher notes – for instance, advisory firms are feeling the pinch to grow, and wealth management platform technology is now essential for any RIA that wants to scale their business. There’s also the surprising speed at which AI tools are proliferating in the market, and advisors see the potential for efficiency if they can harness them properly. Even her team, Dooher says, is already building out a tool they hope to share with advisors in the near future.
I sat down with Dooher to discuss the latest findings from the Schwab Independent Advisor Outlook Study and more.
Suleman Din: Allison, it's great to sit down with you again for another Action! magazine supplement. The latest Schwab Independent Advisor Outlook Study just released, covering several issues relating to advisor technology and emerging practice management trends. What findings surprised you the most?
Allison Dooher: I wouldn't call it surprising – gratifying would be a better descriptor, particularly for someone in my role, in that we're starting to see technology acknowledged and cited as one of the top, if not the top, factors contributing to the decisions that RIAs are making for their practices. It’s just so pervasive, it is in every part of our lives now and becoming more a part of their businesses too. When I get together with advisors, I would say even two years ago, I didn't hear technology naturally come up in the conversations I had with some of the senior executive leaders across RIA firms. That's been increasing in the last year alone; it makes its way into every topic we discuss. So, I feel the study really reflects that.
Din: I noticed almost half of all survey respondents agreed technology is now the biggest driver of change in the industry. What do you think is contributing to that sentiment?
Dooher: There are multiple factors, but probably first and foremost is that the availability of solutions to advisors is more robust and better than ever, and it will only continue to grow. Another factor is the amazing growth of the RIA industry in and of itself. To grow that fast and successfully while maintaining client focus, it will be important for RIAs to seek technology to maintain that level of relationship and that level of service they're seeking to provide.
When I think about technology, particularly in services-based businesses, it always boils down to the client journey at its core. What is sometimes forgotten when we technologists do things like journey mapping is that we focus on the client, but what's equally important is focusing on the client’s trusted guide and the systems and processes that are there to support those guides. The client’s guide is the individual most important to making the client's journey special.
Din: How, then, are firms handling their technology challenges, and is that impacting how Schwab is thinking about how it supports RIAs?
Dooher: Almost three-quarters of firms are thinking about how they can create internal scale, so efficiency is often on our minds and how we are mutually creating it for advisors. We always say the best status is done, so there's still work to be done. We continually try to identify and reduce friction points, if not eliminate those friction points entirely, from everyday servicing tasks for clients. Those are the things that can become painful and stressful in relationships when they don't go well, so we are really trying to deliver absolutely seamless experiences for those everyday advisor tasks.
If you think about the relationship the client has with their advisor, it's very personal. However, there is also a tremendous amount of client data available to advisors. How does that enable them to enrich their client relationships? I foresee a lot of work with advisors will be around helping to expose them to the data Schwab might have relative to their clients. Maybe it's just core custodial data, but are there certain trends, or are there certain aspects of that data that can contribute to their intelligence on their clients? We can help advisors leverage and utilize that data from an AI perspective to really start prompting the next best conversations they can have with clients or identifying opportunities within their client base. It is an emerging area we've seen quickly explode, and it's hard to imagine slowing it down.
Din: Advisors though are still challenged by integrations and building the right tech stacks. What's the ideal they should be working toward?
Dooher: Every firm is going to pick their own path. I will say that more and more, we are seeing advisors migrate from single-point solutions to identifying solutions that are either out of the gate or have the strong potential to be able to serve multiple parts of the client journey or multiple parts of their business. When you have 20 solutions within a tech stack, they might each give you the best point solution, but the difficulty of actually having 20 things talking to each other costs you so much time. What I’ve found interesting is that when advisors use specialty point solutions, they end up actually using only 70% percent of the features and aren't using the full complexity of the solution anyways.
Din: AI has grown considerably since our last conversation, so I wanted to ask if your team has experimented with it and if you have any lessons learned to share for advisors who are considering these types of tools.
Dooher: We're in lockstep with how advisors are thinking about AI, which is that the opportunity is incredibly rich, but we want to be cautious in this space and make sure we're taking the time to learn. We want to make sure when we do truly unleash it, it will provide the value that we expect and we're confident in how it's being used.
There are two areas I would say that we're looking into. The first area is knowledge management. This is a complex business and we have a lot of folks talking to clients. They really are what we consider to be our special sauce, for lack of a better term. So this would support the engagements we can facilitate for our service organization and our client-facing organization when they're talking to advisors, teeing up information to them in the moment but have it be very discreet and very purposeful. In the past, we’d have to go to this guide, then the index, search for the article, read the article… all this time being wasted in that process. We think by unleashing some of the AI tools today we can then feed questions that our service organization is getting and provide answers that are really meaningful with actionable purpose to them. We’re really excited about that. We're going to test internally, starting this year and leading into next year. We can then share that same type of tool externally for advisors when they're coming to us and looking for answers. That’s the second thing we're really focused on.
Everybody's thinking about how you would want to recapture conversations that you're having with clients. How would you want to prepare for a client meeting and the tools that can tee up critical information. Such as, here's what you talked about last time; by the way, here's some key life events that are happening soon for your clients so be sure to mention them. There's a lot of personalization that can go into facilitating great meetings and interactions advisors are really looking into. Of course you capture the outcome, the next steps, and this all bleeds into some sort of client journey and workflow that guides the advisor.
Din: Another big shift impacting the industry is demographics. Many advisors are at the point of retirement, meanwhile clients are getting younger. What are firms doing to accommodate these competing changes
Dooher: We expect the advisory industry will need to hire up to 80,000 employees and in relatively short order. In my conversations with RIAs, they note their tech stack is actually important to attracting new talent. The youth we want to attract into this industry aren't looking to join an office filled with stacks of paper – that's not what today's college graduates envision of what an office looks like. So technology is not necessarily just about supporting your client journey, but it's also about supporting your employees’ journey and in many ways is a big factor in driving employee engagement.
Din: Allison, thank you again for taking the time to speak with Action! magazine. It’s great to witness how the partnership between Schwab and AdvisorEngine has grown in the past year.
Dooher: We've really enjoyed spending time with AdvisorEngine this year, including AdvisorEngine CEO Rich Cancro, yourself, and the rest of the team. Not only at various events, but also separately together. One thing that I love about this industry partnership is the openness to sharing and the openness to educating each other, and sharing what we're hearing from our mutual clients that we're both looking to provide amazing services for.
It's been a really nice journey with AdvisorEngine as we've talked about the areas we think are important, and I think we're really well-aligned. In many of the areas, first and foremost friction needs to be removed if not eliminated from the system, particularly in those everyday tasks for advisors. Second though is that the wealth management journey will grow in complexity and there's a huge opportunity for advisors to simplify that for their clients, by leveraging tools that can come to market and make it easier for advisors to manage client assets at scale. So we're very excited and we've really enjoyed how the relationship has grown.