When Jalina Kerr thinks of the ongoing digital modernization of RIAs, one word springs to mind.
Easy.
As
And the start of the year is the perfect time for firms to analyze what's working and what isn't as they mull
"That's actually at the heart of everything that our team is doing around digital adoption. Because the tech stack is great. But if the people using it can't feel confident in it, you're kind of starting at a deficit there," Kerr told Financial Planning. "We know that as a custodian, you have to make it as easy as possible. They're working with a lot of different third-party providers. Whether it's within their own tech stack, or with the variety of custodians they may need to work with to support their client's needs."
Kerr, who first began her career at Schwab in 1994 on the advisor services trading desk, said the organization has been in the "adoption game" for five or six years now. But 2022 was an important year because it followed the establishment of
"So 2022 is the first full year view into these data insights around digital technology," she said. "We had over 14,000 advisors using the platform digitally in some way, shape or form. And that data curated the ability for us to both look at it at the macro level and figure out what advisors are doing to be successful in the digital space."
For example, Kerr learned that one of the most common things advisors turn to their tech for is moving money. The Schwab Advisor Center move money tool was used by 98% of the firms on the platform.
"It was kind of exciting to see that breadth of data for a full year of 14,000 advisors, and to see what their trends are. That 98% is pretty compelling. And a pretty nice number to see, especially knowing where it was earlier in our trajectory on adoption."
Financial Planning caught up with Kerr to discuss what her team has learned with a complete year of advisor data at their disposal, what ticks off advisors most when it comes to their tech, and why simplicity is the most powerful part of any stack.
This interview has been lightly edited for length and clarity.
Financial Planning: In addition to the "move money" tool that has such a high utilization rate among advisors on the platform, what other kinds of technologies are RIAs excited about using every day and why?
Jalina Kerr: Account onboarding is always a big area of focus for advisors and their clients. They want to show up well for new households that they are cultivating. So there's been a lot of interest and a lot of increased utilization in our account onboarding tool, which we did have some nice enhancements to this past year. We saw an 80% utilization across our advisor base in digital onboarding. And I think it just speaks to the need that advisors have to be able to seamlessly build that workflow from start to finish.
They've got their CRM tool, they want to interact very seamlessly in the workflow process with their custodian, and with all the places they might need that data to go into. Onboarding is a big one, just because it's a more complex workflow. Historically — in pen and paper analog-land — we saw upwards of 30% rework rates, meaning there was just some kind of error in the paper that doesn't get caught until another set of eyes is looking at it. But advisors who are utilizing the digital onboarding tool are seeing only a 4% rework rate, and that's a huge lift. Thinking about it operationally, that's a lot less time they're spending chasing down the follow-up problems.
FP: Getting back a bit of time in the day is always a huge plus. How else are RIAs using technology to stay in front of their clients? And why is that so important in 2023?
JK: It's a good point to make because it's usually the way you can hook the advisor. When they can see the value that it's going to lend to other parts of their business. And I would highlight two things. We've been in somewhat of an uncertain environment, and when you think about the macroeconomic things that are happening in the world that create uncertainty for investors, advisors need to be spending more time calming people's fears. Helping them understand how their portfolios are going to perform in an all weather-type scenario. And if they're busy chasing down operational things, or the tech isn't working together the way it should be, it's taking away time from the relationship. So there's a huge value-add for them to be able to spend more time with clients. I think it also frees up, frankly, dollars or monetary investments. Because we know from our
That's the other thing advisors are faced with right now. Their clients expect more and more value for the same cost that they've already invested in. And advisors need to kind of free up some capacity to think about those things. And so there's a direct correlation between efficiency to both dollar saves, but also the depth with which they can think about furthering their relationship with their clients.
FP: When it comes to technology, wealth management has not been at the bleeding edge. In fact, many see it as
JK: That's such a good question. When I look at the breadth of my 30-year career, and then I think about just the last five or six years and the progress that we've made, I think it follows sort of that trajectory that you see more broadly where the amount of technological change that you'll see in a year now equals what used to feel like 20 years. And it does feel like that's true in financial services. We are really seeing an accelerated pace of development. Because of machine learning and a lot of the technology that's out there, I think we're finally figuring out how to harness that and turn it into a lot more of a seamless experience for clients. Now, of course, we always have more work that we can do to have a heavily regulated industry. And we always have to be mindful of the fact that we're focused on asset security. It's job No. 1, especially for us as a custodian and a broker dealer. So I think we're always sort of doing the balancing act of, 'hey, we've got to be making strides here.' But we also have to make sure we're putting asset protection at the top of the list. And that's a friction, right? That can kind of get in the way. But even with that said, I feel like we've made a ton of progress. And I think what we're trying to do is use a lot of positive rewards to try to incent those kinds of behaviors.
When you think about some of the technology that is out there, the scale and efficiency piece that we've been talking about is something that speaks very loudly to small advisors. Because they know that they can really benefit from taking advantage of it. It's almost like they don't need a positive because they can see the positive impact that it's going to have for them in terms of being one less thing that they have to put that hat on for every day.
I think for them, it becomes more of an exercise in change management and incentives. I'll give you an example. We have recently deployed an incentive around wires. So if you do a paper wire with us, it costs $25 to the end client. If you do a digital wire, it was $15. So we knocked the $15 down to zero because we just believe that it's that much more secure and it's that much easier. Sometimes it's those sort of incentives that will get these firms or the large ones, particularly, over the hump. Because it ultimately becomes a change management exercise for them to get everyone on board and make sure people aren't kind of slipping back to the old processes.
FP: What is a common point of frustration you hear from advisors when it comes to their technology?
JK: When I'm talking with advisors in this space, there is a little bit of a yearning to say, "why is that me and my team have to figure out how to pull all of this tech stack together and make it work efficiently." So I think that there's some opportunity there when you think about finding a way to make those API's and make those integrations run a little bit more on autopilot, for lack of a better term. Because I think the more complex the industry gets, I think what advisors have done is say we're going to invest in this and we're going to invest in that. And then you come to this point where you've got so much you're trying to figure out how it's going to fit together, and maybe it doesn't.
So then you have a little bit of this moment of clarity where you're thinking about how a tool could help you kind of equalize all of that out and clear out the noise. I think today there's still an over rotation of people having to do that (and) having to be the connector to kind of create all the workarounds. What I hear from advisors is, why couldn't the industry think of a more seamless way to pull all this stuff together? It ends up coming back to simplicity. And that's a tough one because everybody, myself included, I like the shiny object, right? You see (a tool) and think this could be super helpful. Until you sort of try it out and realize it's not necessarily what you thought it might be. That's a challenge for sure.
FP: What technology of the future are you excited to see finally come to fruition? Maybe not this year, but perhaps a couple of years from now?
JK: I think data is huge. Because a lot of what I was alluding to before, is tied to advisors pulling together disparate sources of data and trying to make it work. I've talked to more advisors in the past couple of years who have built out their own, basically, data analytics team to do this work. You have to start to think about harnessing the power of the cloud and harnessing that data in a very flexible way. Because I think the way of looking at data before was very prescriptive. Here's a report to help you. Here's this particular data set. But to actually give freedom to advisors in a much more open way to pull in what's important to them and to really curate that, I think, is super powerful. And it's very, very important to the industry (because) it could really create some interesting insights into the businesses that you might not even be anticipating. You set out to answer one question, and it actually fostered three more that are of interest to you. So that is a huge one.
Also just continuing to kind of find some of that consistency in these workflows there. There's a proliferation of tools out there. You've got all these technologies that presumably get rid of paper. You've got proprietary technologies, like our digital onboarding tool. But it's incumbent on all of us to figure out how to simplify those things, make sure they're working for advisors and not actually adding complexity to the mix. So I think that's the other thing we all have to focus on. Because those things are critical to freeing up resources.
