What advisors misunderstand about technology: In|Vest Insights speaker Lule Demmissie, president of Ally Invest

What advisors get wrong about tech: Q&A with Ally Invest President Lule Demmissie

May 29, 2019 4:01 PM

When it comes to technology, financial advisors may be missing the biggest opportunity: storytelling.

That’s according to Lule Demmissie, who was hired as president of Ally Invest last month. She says most advisors are using technology to become more efficient, but they’re not focused on improving interaction with clients.

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“The way you engage a client is knowing how to shape a story in front of their eyes, get them closer to what you are envisioning for them and their life,” she says.
As a former financial advisor, Demmissie has served in roles at JP Morgan, Merrill Lynch, Morgan Stanley and TD Ameritrade. Here’s what she says should be top of mind for financial advisors in the digital age:

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Some financial advisors are thinking about how they can integrate robos into their practices. Where is the opportunity for them? And where is there risk of competition?

DEMMISSIE: The advice component is still what people hunger for. I don’t think it’s a matter of competition. I do think it will change the nature of what financial advisors do and how they deliver it.

When robo advisors first showed up, a lot of financial advisors thought, “OK, well I will put the brother-in-law accounts in there, my smaller accounts, and it can be my scale shop.” A lot of them saw the robo portfolios and thought it was not sophisticated enough for their wealthier clients. There’s nothing wrong with utilizing it for that, but I don’t think that’s where the transformation will happen in the digital sphere of financial services.

Where will the transformation in the wealth management industry happen?

The nature of going through the mechanics of setting up a portfolio or setting up your products — I think that is going to be what is completely digitized. What I think the best financial advisors will continue to migrate towards is understanding that their value is not about the products alone. It’s understanding the nuances of human psychology, what motivates their client, what really keeps them up at night, etc. The other is having an inclusive strategy in engaging several members of the family. For example, including both spouses and kids.

What about when it comes to the technology itself? How can advisors better leverage it?

I think a lot of independent RIAs are leveraging technology really well. Whether it’s through their custodians or other means, they are very savvy users of tech. But, for the most part, I have found that advisors are using technology because they are solving for efficiency, and not necessarily because they are solving for client experience. This requires a shift of mindset — not thinking about technology as a utility, but rather as an integrated part of how they think about shaping the client experience.

In the traditional world of advisors, you think: What am I going to produce for the client? What are the components of the pitch book? How do I shape the story? What am I going to bring in to the meeting? That same mental approach to storytelling and shaping the client experience through that has to shift into digital, and that requires people to become digitally native.

How do they shift?

It’s a daily thing. If you talked to advisors working in the 1990s or the early 2000s, you know that the way they put that portfolio in front of their clients is what they spent a lot of their energy around, because they knew that the way you engage a client is knowing how to shape a story in front of their eyes, get them closer to what you are envisioning for them and their life. And it also allows you to have a conversation with the client.

In order for advisors to utilize technology, they first have to become digital natives and know how to integrate technology in the same way that they did their pitch book. That’s not just choosing to use a tablet. It means: Who do you hire in your advisory shop? Do you need to hire a designer? Do you need that kind of skill set in your shop to be able to transfer the stuff you used to do on paper into the digital sphere?

Do you think there are upcoming changes advisors aren’t ready for?

I think that honestly there will be a lot of changes none of us are ready for. I don’t think there's a such thing as readiness as far as “I know what is around the corner.” I think readiness will happen in how quickly we can adapt. That will be the real key for advisors. Can they use technology in an experimental fashion? It costs a lot to invest in technology, but they shouldn’t think of it as spending a lot of money up-front, and then expecting that software or system or platform, or whatever it is, to last a long time. That model, it can date you really fast in your capabilities. It’s more about adaptability and knowing how that translates to your tech stack.