A tech reporter and columnist's farewell

Six years is enough time to gain passing familiarity with the breadth of advisory technology. It isn't nearly long enough, though, to plumb its depths. Almost every week of my early years at InvestmentNews proved daunting. Gaining a sense of context surrounding the subject matter was always challenging, so seldom was it straightforward or intuitive. Had I realized just how trying those first few years would be, I likely wouldn't have taken the job. So in leaving InvestmentNews, I must say thanks in print to then senior managing editor Evan Cooper. Through conversations innumerable, he would politely retrace the history and evolution of some category or other of advisory or financial services technology that I was tackling in a story. I am the type of writer (a historian at heart) who needs to feel confident in his understanding of the context of how something came to be in its present form before being able to write about it competently. Thanks to Evan's many years in the industry, he frequently was able to quickly inform me of the given subject's history of ownership or inventor, or at least point me in a direction to discover that information for myself. And that narrative very often was along the lines of mom-and-pop pioneering; many times, an advisory firm itself with an unmet need and no available solution would build something for itself.

Lacking refinement

Often such efforts lacked refinement or the spit and polish a consumer might expect from something out of Silicon Valley. But the tools nonetheless could get the job done. And even now, the advisory industry remains too small a market to regularly attract outside interest from the tech world at large. So what financial advisers have ended up with is a hodgepodge of tech choices, many now long in the tooth and often referred to as “legacy” in tech parlance (I don't mean to hurt your feelings, PortfolioCenter). Although much of it originates from a smattering of small can-do firms, some of it is from behemoth software companies that long ago gave up on regular significant innovation (Advent Axys, I am referring to you). In saying goodbye, I wanted to throw down three challenges to my adviser readers and friends. Challenge 1: Organize and gain some leverage First, to the adviser leadership of the Financial Planning Association and the National Association of Personal Financial Advisors: Get your act together and form some type of collaborative interorganizational technology committee. You are the only two entities with enough members to bring any leverage to bear on the custodians and other providers. Second, stop accepting any money or sponsorship from those providers when it comes to conferences, and thereby escape being beholden to them. Third, exert some influence. Force the big firms to the table and create some tech standards or at least an industrywide data dictionary. Challenge 2: Be less greedy Yes, we do live in a market economy and I am pro-business enough to wish for everyone to make a buck. Even so, every adviser should engage in some outreach to the younger, poorer generations. Since starting this job, I have made a point of regularly asking friends and people I meet where they get their financial planning and investment advice. All too often, the answer is from no one in particular, and increasingly, the answer is some form of website. Granted, the websites are put together by humans, and perhaps some of the content is actually written by advisers, but these aren't direct dialogues. Most of these contacts of mine are squarely in the middle class and mass market, and only a minority find themselves to be mass affluent — a mere two friends around my own age fit the typical high-net-worth definition of $1 million in investible assets. Ironically, while I have spent my work life these past six years writing for an audience of advisers, I lack the assets to interest most registered investment advisers and don't have an adviser myself. So bring in some young clients that you wouldn't otherwise consider. Help them increase their assets and become the clients you wanted in the first place. The beneficiaries of your succession plan will thank you later. Challenge 3: Hug a small third-party provider I might take a little heat for this, but no matter — by the time you read this, I will be gone. Most advisers are cheap. And all too many plague their mom-and-pop third-party providers' tech support with questions unrelated to the products that they bought from them. In fact, the owner of a popular third-party tech firm recently contacted me asking my opinion. “How would your audience of adviser readers react to us significantly reducing our customer support from the levels we have now?” he asked. So many advisers abused his support people with questions unrelated to his product that they couldn't keep up, and he was constantly adding support staff — an untenable situation for the long term, he said. I responded that quite a few would be irritated, but given ample warning and a comprehensive letter as to why, his users would reluctantly understand. I have come to realize that firms such as his didn't go into the business of serving advisers to become rich, and few do. It behooves you to cut them a break, be patient and perhaps take a deep breath the next time you are feeling demanding. To wrap up, I will just say a few words about where I am going. It would be wrong for me to say that the audience I write for has driven me to my new job. It would, at the same time, be a lie not to say that my new mission is a refreshing one. I am headed to Wealthfront Inc., an online investment management firm geared to the mass market. I will serve as editor and something of an interindustry liaison. Although the firm certainly wants mostly mass-affluent customers among its base, it takes only a decidedly mass-market sum to open an account: $5,000. That account is then allocated based on an initial risk tolerance questionnaire, and composed of low-cost ETFs and no-load funds. All users receive regular re-balancing, and those with $100,000 invested also receive regular tax loss harvesting. Other features are to come. A major part of what attracted me to the firm is the talent pool of engineers and quants on staff. And it is their sense of purpose that both inspires me and makes me fear for the fairly complacent parts of the less automated, human-centered advisory industry. I nonetheless wish you all the best.