The following is an edited transcript of an InvestmentNews webcast, “The Secrets of Top Technology Performers,” held Sept. 12. It was moderated by deputy editor Greg Crawford and Mark Bruno, director of digital and data strategy.
InvestmentNews: To begin with, I wanted to ask Leda and Ryan where you see technology spending going. Budgets around the business are still constrained, but where do you see technology budgets going?
Ms. Csanka: The top thing that I hear from my advisers is around not just the tools and the capability, but whether we can bring these tools to them in a simplified way — building best practices around them, creating automation and work flows, and integrating disparate products into seamless work flows. It's about helping advisers be more efficient and effective with their time; it's about giving advisers an opportunity to spend more time with their relationships with clients.
So I'm seeing a lot of requests for usability, a lot of requests for work-from-anywhere. A lot of advisers are asking for help in creating more touch points with their clients, where the client is demanding more mobile capability. And so a lot of our efforts and a lot of our budget spend is around improving the adviser's relationship with the client and focusing on productivity gains for the advisers.
InvestmentNews: Ryan, does that resonate with what you're seeing and doing?
Mr. Reineke: We certainly are getting a large demand for efficiency and productivity. Recently, as the generational gaps are closing and different people are coming into wealth and needing attention, client experience is also making it to the top of our list — not just from the adviser perspective, but extending some of that productivity and efficiency all the way to the end-investor.
WHERE TO PUT MONEY
InvestmentNews: Rick is really in the trenches and able to give us that frontline view. As the chief executive of a firm, where are you focusing your technology resources? Are you doing the same sorts of things as Leda and Ryan?
Mr. Adkins: Well, we've attempted to use technology to build the value of our practice, to make it more process-driven, more cost-effective, where we allow humans to do the things that are creative and not easily replaced, and let the commodity-type stuff be done by technology. So that means you have to get out of your comfort zone and take risks, because you don't always know how things are going to play out.
InvestmentNews: Leda, can you talk about some of the things that your top firms are doing to increase productivity — using technology specifically to increase productivity?
Ms. Csanka: I have a series of groups that I work with in the field representing our different broker-dealers that have helped me put together a tool that allows a lot of custom reporting. It allows the advisers to segment their clients in terms of helping understand who their top clients are and then how to spend their time effectively.
And we've created a program that pre-populates campaigns. They send out regular campaigns that would be interesting to their clients — maybe something on cooking or something about kids' soccer — that they can automate and they don't have to think about it. We've found that by helping the adviser automate more-frequent touch points with their clients, that some of our advisers have gotten as much as 28% growth in their practices.
InvestmentNews: That's very helpful. A lot of it, when it comes to technology, is really around work flows and business process, and it's not always about the actual use of emerging technology itself; it's the implementation and how it changes the firm's work flows.
Ryan, you have exposure to thousands of advisers. When you look at some of the top firms at Cambridge and throughout the industry overall, what are some of the things that they're doing to increase and improve productivity levels?
Mr. Reineke: The best way to use technology is to take the greatest advantage of the technology that's available. And the goal is complete capacity — instead of using bits and pieces of stuff, really understanding the offering. Customer relationship management productivity is a huge example; so is the designing of models for your practice and using models or third-party money managers so you're spending less time on the maintenance and the infrastructure of trading, and instead spending it on something that's client-focused and beneficial to building the relationship.MEASURING PRODUCTIVITY
InvestmentNews: Rick, can you tell us how you define and measure productivity? Does that mean you can work with more clients, handle more accounts? Does that mean you spend less time in the office? What's the way that you go about measuring that?
Mr. Adkins: We measure it based on how well we've done in keeping costs down, so that at the end of the year, the professionals share in a larger pool of money. We use the model of 40% of the regularly generated revenue goes to the professional in terms of salary and benefits, 35% goes toward overhead, in theory, and 25% is then left over for ownership compensation. The more we have tried to follow that, it starts making any decision — technology or otherwise — have real meaning at a firm level.
I ultimately look at the profitability factor and where can we outsource items that really make no sense [for us to do], even though we did it that way for a long time. That's been one of those areas where technology's allowed us to dramatically cut costs and get rid of some of the more redundant kind of workload.
I remember years ago, we had one staff person who from February through the fall would virtually stand at a copy machine copying tax returns. That's a very poor use of human talent. Then, when document centers came out it made it where it was far more cost-effective to spend money on a more expensive machine that would replace that, and I think that's the kind of thinking you have to have. Can it be done as effectively — or even more effectively — by something that may appear to be expensive on the front end. But when you compare it to the cost of paying a human to do it — particularly things that humans don't enjoy doing, like filing and other repetitive tasks — technology's just a much more effective way, not only from a cost standpoint but a personnel standpoint?FIRM PROFILE
InvestmentNews: Rick, could you give our audience a profile of your firm so we know the size and the structure of the firm, because we have advisers on the call who may be singles or sole practitioners, and all the way through the range. It might be helpful for folks to know what your practice looks like.
Mr. Adkins: Our firm began in 1984. We are, have been and will be a financial planning firm, meaning every client that comes to us is getting a comprehensive financial plan. We do it differently today than we did it 25 years ago, in that it's much more geared around what the client's wanting. Instead of dumping a 300-page document on them, it really is done in a progression. But it allows us to get to know the client very well.
The vast majority of our clients are physicians. They're principally internal-medicine physicians, cardiologists, oncologists, radiologists. They intuitively understand what we do in terms of the processes we use for planning, as well as how we go about developing their investment allocation. But we use a bifurcated fee structure so that we don't just bundle the fees all together, and it keeps us committed to doing the planning work. The clients are billed on a more traditional structure, as it's assets under management, but it's lower than what the industry norms are. Then we bill a retainer that covers the planning work and the consultations, the analysis, all of that.
We have about 240 clients. We manage about $330 million. We don't have minimums, because we have a lot of younger physicians who are just getting started, and I joke that they have negative nothing. They have huge medical school debts, but they have high incomes, and what we're really trying to do is help them learn how to manage cash flow and consumption so that hopefully they can retire one day. Our practice is as much about making — in fact, our tag line is helping busy people make smart financial decisions. That's really what we're all about, helping clients have the good data to make good decisions. And then we kind of help coach them through how to see a financial transaction and how to make decisions in a more holistic way.
The investment side is very systematized and it probably occupies a much smaller aspect of time in our face-to-face meetings with clients. Sometimes they'll have a question, but they pretty well understand the process and have delegated that to us.CLIENT RELATIONSHIPS
InvestmentNews: Leda, a lot of the work of our reporters at InvestmentNews centers around the client relationship. In other words, focusing more on that relationship and understanding clients better, having a holistic view of the clients and their goals. What are some of the areas where technology can help?
Ms. Csanka: My leading-edge advisers who are taking advantage of all the latest, greatest technology out there are thinking of it as not replacing face-to-face dialogues with their clients but expanding that into what I'll call the digital touch points with their clients.
One of the ways is automating the touch points, setting up schedules, but another way that advisers are trying in this leading-edge area is recognizing that clients are using mobile technology. And they're asking for, and we've rolled out, a new set of capabilities for our advisers that allows them to have dynamic websites. We have all this preapproved content so that every time a client comes to their website, they have a new experience. So it's similar to a shopping experience.
It's all relevant content for a client. If they click on something around tax planning this time, next time, they might get an article that's very similar to that. So it's trying to create relevant content in a digital experience for an adviser and their client. It's taking that down to mobile applications that are branded; they're branded with the adviser, they're not branded Cetera. So it's adviser branding and they're creating a relevant digital presence. So that's one of the ways.
And it's not replacing that relationship, but it's seen as a supplement to creating more face time with the clients. Because instead of your spending a lot of money building a website, and clients go there one time, we're trying to make it someplace that your clients will come back to over and over again because there's content on it that's frequently refreshed and relevant.
InvestmentNews: Ryan, what are the areas that you're working toward to strengthen that client-adviser relationship using technology?
Mr. Reineke: Leda actually hit most of the key points on that. It's kind of having relevant tools and services in a model that are viable in a mobile-device world, as well as outside of it, and making content relevant to either the device or the client's needs and participation. The trick becomes standardizing the processes that are mundane — making them repeatable but still leaving the output or the interaction with a custom feel.
We're all working on the nebulous concept of an end-to-end workstation where a client, if you're engaging them in the financial planning space, tweets on their mobile device that they might have just gotten an inheritance. That might trigger an automatic follow-up contact point in the CRM and then the account automatically opens and it's funded. So that whole end-to-end experience, making it unique and relevant, it is absolutely a goal and a target that I think all of us are shooting for.CLIENT-FACING SIDE
InvestmentNews: In InvestmentNews' research on advisers' use of technology, we asked a lot of questions just of the individual advisers about their back end, their ability to align their technology with firm goals and firm objectives, but what we didn't get into are some of the things that you and Leda are also talking about, the client-facing side.
Is there anything you've noticed that your top firms are doing to further the client relationship with technology? Do they have mobile-optimized websites, or are they doing anything with social media?
Mr. Reineke: Our top performers are using social media beyond just as a marketing tool but as a way of generating relevant engagement opportunities and coordinating that with CRM. They also target client interests with social media, depending on the groups that they belong in.
I think the big conversation there is our interpersonal communication opportunities; they're really becoming less personal. But again, everybody's looking to grab the client's attention and then keep them engaged, and it's usually based around steering relevant content to the media used by that end-client.
InvestmentNews: Leda, there are so many different ways to connect with a client or a potential client these days that I wonder if you're noticing anything when you look at your top advisers. Are they doing anything different from that public-facing perspective? Whether it's through mobile applications or desktops, are they developing their own apps? Are they doing anything that you would define as innovative that sets them apart from any other advisers in their market?
Ms. Csanka: I'm not finding a lot of my top advisers building their own applications. Usually, they're partnering with us or they're partnering with external firms, so I don't see them building their own applications. There are a few that do spend time analyzing their data for efficiencies.
In the social-media space, a couple of years ago, everyone said you have to have social media or you'd fall behind, and so we did spend some time like all the other firms rolling out social media. But then the advisers said, “What do I say now?” So what we've tried to do is create preapproved content so that they have a selection of all these things that they can just click on, and then it actually interacts with Twitter and Facebook and LinkedIn. And so they can think through, hire someone out of college, even get an intern in their office to become the social-media program manager. So it's really slick and easy, and some of our top advisers are finding that this social presence is actually not just a way to keep in touch with their current contacts and clients, but to prospect, and get out there and meet new clients.CONTENT SHARING
InvestmentNews: There is a question from our audience, Leda, that has to do with software. Are there specific pieces of software for content sharing, things like that, within the CRM that you find particularly useful or easy to use?
Ms. Csanka: Definitely, tools that help create automated campaigns, sending out automated newsletters, something that is the set-it-and-forget-it type of capability that I was talking about before. There are a few different vendors that do that out there; I don't really want to mention any names, but regardless of which one that you select, we're finding that our advisers who are using these types of tools are finding lots of productivity gains. We're trying to bundle solutions for the advisers as best practices — here's how you do it, here's the directions to follow — so I think it's more about finding others to share best practices with and to learn from in order to engage in these new capabilities.
InvestmentNews: In terms of preapproved content, is that developed in-house or do you reach out for that, as well?
Ms. Csanka: We use a combination of both, but we have a big team of people in our marketing and communications group constantly creating this fresh content, working through the back office to get it pre-approved so that it's just ready and available for the advisers on our websites. They can use the set of campaign tools I was talking about. They can put it on their website. They can use it through social media. They can even push this down to their mobile apps that are branded for their clients to download.
So we use this preapproved content in a lot of different ways to reinforce the message, manage the digital touch points between the adviser and the client, and help the adviser make it a non-event. We create all the content for you, and you can use that for a client presence.MOBILE CONTENT
InvestmentNews: Rick, I want to turn this part of the discussion back to you again to get that sort of where-the-rubber-hits-the-road view, in terms of the sorts of things that you're doing. How are you working with mobile technology in terms of content?
Mr. Adkins: Our clients tend to use mobile devices more than workstations, whether it's a smartphone or a tablet, and so one of the things that we decided to do about a year and a half ago was totally revamp our entire communications process. The first thing we did was review the websites of a number of the top firms around the country, and we came to the conclusion that they all were using that boilerplate content, and after a while, it was like blah, blah, blah, blah, blah. You read the same thing over and over and over on all these websites.
And so we went to a developer and he said we need a communications infrastructure, not just a website. We need a way that we can communicate with prospective clients and have a fresh look and have it look good, not just on a workstation but on a tablet or iPhone or any kind of smartphone, and so we really rebuilt that along those lines.
For years I had pooh-poohed Facebook. Ironically, I think it's become one of the best communications tools, but if you went to our Facebook page [you'll see] we don't put a lot of traditional posts on there. I mean, people don't really care what the Dow did today; they do care about how to live a happier, fulfilled, successful life, and honestly, that's what we have focused on. So we've really tried to use mobile along those lines; whether they are doing it, again, with their tablet or phone, they can get to that kind of content.
We've really tried to focus though on getting the kind of information our particular clients want, and I think that's the key. You really need to define who your client is, how they want to be interacted with, what kind of questions they want answered, because I can tell you, if I did a campaign to my clients, they would kill me, they get inundated with so much stuff. But that's just my clientele. That's not necessarily the same for other folks. I can see how for some firms, that would work; it probably would not work well at all for us."TRUE INTEGRATION'
So one of the main things that we've really focused on is, “How do we build for the future by developing true integration?” I think that is still the elusive element of all this. You know, all the software vendors and all the custodians talk about integration, and integration is still not there — not to a level that I think it needs to be. Partially, that's because everyone else thinks from a standpoint of account-based thinking. In our world, everything's household-based, and so for something to integrate means that it has to integrate at the household level, not an account level. And until you have a household variable that transcends all the various pieces that you're using, you're never going to have true integration at the household level. And that's really what we've been focusing on: How do we build that? What are the pieces that are missing? How do we get to that with everything over the next few years?
And we want to get all of our software to work on a more integrated basis. I'll give you an example of one of the ways we've tried to do that. We hold assets in custody at Fidelity and Schwab; most are at Fidelity. Fidelity has something called a “short name.” We discovered accidentally that you could actually go in and assign whatever short name you wanted. We created a household variable so that's what went into the account so that, no matter what the last name is, no matter what the tax ID number is, we can actually group everything by household so that it transcends all the traditional ways that you bundle someone together.
So with the CRM, with planning software, with our document management software, with our business flow, we're trying to get the household variable in all of those so that it truly builds an integrated infrastructure.PAPERWORK
Mr. Reineke: Rick, I think you have a very interesting point and a concept on that household conversation. When most people set up their CRMs, they're contact-based, i.e., a person as opposed to a household. The challenge is to coordinate some of that paperwork and automatic data flow downstream. On another matter, some of our advisers are also using some very basic forms of technology to add to that fulfilling life conversation by using webinars and Skype meetings so the trips to the office aren't as relevant but still you have that interpersonal contact with your clients.
InvestmentNews: Leda, can you tell us about what you're seeing at the software level, which does own probably the largest share of most advisory firm's budgets? What are you seeing and what are you doing to help support advisers from a software perspective, and also promote integration?
Ms. Csanka: Well, like Rick was saying, almost all of our top advisers think that the financial planning process is the key to everything, and it's not just about what mutual fund you want to trade. The financial plan is the start of everything, and so we do really support that. We have a pretty sophisticated tool set that we partner with to provide that capability. We have integration with our other tools so that any data that you have within our systems flow into the different financial planning tools that we might use. The financial planning tools we use also have client portal capability. More and more advisers are requesting this to make this information more available to their client in a mobile space.
So the financial plan is the start of everything, and we see ourselves as the data connection point. We aggregate the data, we store all the data, and then from our software perspective, we have single sign-ons, but we go deep within different screens within different vendor tool sets to try to make it an easier work flow across these different products by connecting the data between the tools.DEEPER INTEGRATIONS
So that's one of our investments. We continuously look to have deeper and deeper integrations with the different product sets on the market, and by deeper integrations, I mean more and more detailed data exchange occurring. And that gets a sizable amount of my attention.
I think Rick's comment around householding is critical. All of our top advisers need householding. We have created a lot of analytical tools so that we can create those households for the adviser. They can set them up, they can understand the entire picture, and that also gets carried into the financial planning tool sets.
InvestmentNews: Ryan, I'd like to give you the chance to answer the question, as well. Could you tell us what you are seeing from your top advisers in terms of mobile usage and what they're specifically doing to access firm-level data or execute transactions? What are some of the core activities that you're seeing that enable outperformance?
Mr. Reineke: I think that we're very similar to Leda in our approach except that most of our top performers are actually CRM-based first, and then financial planning would be their second step. And then as that progresses down through account management, whether that's proposal generation, trading, multicustodian situations and keeping that data consistent through client reporting, and then also looping that back to close the loop and keep the CRM and the financial plan in touch with all that data flow and how it changes over time.
Most of our advisers are in the mobile space, and their lives revolve around that CRM contact and having account balances available if they get the call from a frantic client while they're on the golf course or at another meeting. It's just kind of a one-stop shop. They can put their phone down, pull up their record, take a look at it, answer the questions from a servicing standpoint, and keep that data consistent and accurate across the multiple steps with things like single sign-on, deep linking into things and exchanging data. So if it starts in the CRM, through the financial plan, through the account-opening documents all the way into the disclosures and e-signature that's available, depending on the registration, that is a one-stop shop. You use it once and you repeat it across the entire process.WHAT'S IN THE FUTURE?
InvestmentNews: Leda, I'd ask you first — and then Ryan, we can come to you next — when you're looking at the top-performing firms of tomorrow, what you expect will be some of the primary drivers and differentiators of advisory firms over the next several years from a technology standpoint, of course. Leda?
Ms. Csanka: Well, we talked a bit about it before. I think that having the advisers be able to work with the clients wherever they are, not necessarily in the come in, face to face in my office visit, is really what we're seeing as trends and what I think of as the future. So finding those digital ways of dealing, whether it's Skype, whether it's Facebook, whether it's dynamic content, it's expanding into the digital space where being right next door, being face to face doesn't mean physically being in the same room. I see that as more and more of a trend.
And it's still about personal connections, so it's making that kind of digital experience as extremely personal as you possibly can. What Rick said about his firm, that it doesn't even talk stocks on their Facebook page; it's all personal, “How do you transition to that new lifestyle of retirement?” I think all of that plays into staying personally connected with your clients in a digital landscape and that's where we're seeing the focus.
InvestmentNews: Ryan, anything that you would add to that as you look out a few years? As you see how some firms are separating themselves from others through the use of technology, what might you expect to be the biggest differentiator or a few of the biggest differentiators?
Mr. Reineke: I think the key is going to be understanding your client's expectations and being able to provide a service delivery mechanism, whether it's technology, in person or on paper, that's meeting their expectations. Early adopters in the digital world probably are going to have a leg up as we move into this. But advisers need to realize that while iPhone is the latest, greatest craze, firms that are investing in or adopting technology are not being limited to a specific platform.INTO THE CLOUD
InvestmentNews: We had one question from the audience that I think is particularly relevant and I want to get your perspective on it. And Rick, you alluded to it, saying that you hope that within a year, you won't have a server in your office, but instead will have moved things web-based into the cloud.
There still seems to be some uncertainty around using the cloud as a solution and the security of the cloud and, Leda, I wanted to start with you. How do you address that issue? Have you addressed it? Do you get a lot of queries from your folks about, “Is this really safe?” and, “What are the firewalls that you need to put in place?” or are we over that hurdle at this point?
Ms. Csanka: You know, I'm just going to tie my response to something Rick was talking about before. He used the words that I coach my clients through financial decisions, I help them navigate the financial world. I absolutely feel like at least the advisers are expecting for my firm to help with some level of IT consulting services and coach the advisers through those technology decisions and help navigate the complex world of the cloud. So the cloud tried to simplify everything but, boy, there's a lot of security concerns and, “Is everything really backed up?” and, “Is your data really somewhere that you trust?”
All of those are questions I get every day. We are working on vetting a few vendors that will get our stamp of approval so that we'll just try to simplify that decision-making process, and we'll put together some answers as to why you would choose one solution over another to help be that coach of the decision-making process around the technologies.
We know that one size doesn't fit all, so I can't find a single solution for everyone; I need to put together sort of a shelf of different alternatives that we've vetted and we think are safe so that the advisers can move forward with more confidence.
InvestmentNews: Ryan, how do you address those same sorts of concerns with your folks?
Mr. Reineke: Again, not to try to echo Leda, but we're at the same point in the conversations with many of our advisers. If you're using Cambridge's offerings, they're completely web-enabled. So from an adviser's perspective, it is the cloud to them for all intents and purposes, because they're not paying for infrastructure or support. Or if you're using our imaging system, we technically have a cloud solution for them. If you log into the clearing firm technology or platform's trading systems, it's all web-enabled.
I think we're kind of beyond the cloud thing in defining exactly what is “cloud” or what's not, or what's hosted or what's not. Its discussion has been hampered by noise around security, such as, “Is it SEC compliant?” Those are all things that we spend a lot of time evaluating and making sure that when we're making recommendations, they're compliant or even helping our advisers in some aspects on a piece of technology that they're thinking about implementing that would be an addition to what we offer on our platform.
So I think the cloud is here. I think most people have already adopted it. And as Rick said in his earlier conversation, most people realize that if you can take the server room and put in somebody else engaging clients and being productive, it's a win-win for everybody. So I think that age is already here.
Mr. Adkins: The only thing we've got left on our server is Microsoft Office and QuickBooks. Basically everything else has already shifted to its own cloud.
In the beginning, I think I envisioned this big cloud up there. In fact, you really have multiple smaller clouds scattered hither and yon. It's kind of interesting. It's just that we knew we needed to be in a position that, either due to weather or some other physical event, we could still function with or without being able to get into this office. And I think everyone around the country, whether it's hurricanes or fires or floods or whatever, has experienced that.CLOSING THOUGHTS
InvestmentNews: It's already certainly a very different conversation today than it was just a couple of years ago.
I'd like to go to everybody on the panel one more time for any closing thoughts. Rick, why don't we pick up where you left off? You said to me in the past, you've made some $80 mistakes and some $80,000 mistakes. I'm curious. What's the biggest mistake that you've made and you've learned the most from?
Mr. Adkins: Well, it's kind of been repeated in different ways. I think there are times that software and hardware get sold as being the panacea and be-all for everything, and you find out later, based on how you're going to use it, it's really not. We've used a portfolio accounting system going back to 1990 that was not going to make it into the next decade, but converting that many years of historical data was a massive challenge. We initially tried going a route, because Fidelity entered into a relationship with a provider that provides gorgeous reports, but it's not an accounting system, and you couldn't get down into the guts and see what's in balance and what isn't, and what's a client deposit versus a withdrawal and all the kind of stuff we were accustomed to having.
It probably took me longer to make the decision to pull the plug. I kept working, trying to make it work, but it just didn't. And fortunately, we found Asset Book, which could actually map our data, convert it, and the reporting is gorgeous, the clients love it, and it's all web-based. But you know, what we went through in the 11 months with the other system was helpful because it caused us to realize all the clutter that was in our system. It forced us to really examine what is it clients really want, but also where is the integrity of the process in all of this that we can be comfortable we've got accurate stuff. And so I learned a lot from it; it was just a very expensive mistake.TOMORROW'S TOP PERFORMERS
InvestmentNews: Ryan, when you're looking at the top-performing firms of today, top-performing firms of tomorrow, do you have any closing thoughts, any key points that you would want anybody on this webcast to remember from the conversation?
Mr. Reineke: I'd like to quote your survey results. Most advisers don't have a formal process for evaluating technology for their firm. I would say — and I would echo Rick's last statements that letting the software define your deliverables is probably the wrong approach to that. Define the need first and then try to find the tools that fill the need.
InvestmentNews: And then, Leda, we'll close with you. Anything, just a closing quote for us, a final thought for our audience that you would really want to reinforce about becoming a top-performing firm or for driving a top-performing firm? What's one thing that you'd want to leave our audience with here today?
Ms. Csanka: Yes, the one thing I want to say to all of the advisers is that your voice is so absolutely important. As an industry, the way we're going to improve all of this technology and make you more effective is to listen to your voice. So I see it as my role to bring your adviser agenda and voice to the vendors to seek out products that are simple, easy to use, and make you more productive. So as you find things that are difficult to use I would encourage all of you to use your technology leaders within the firms you deal with to push to make everything easier.
