servicing strategies | PLANADVISER November/December 2016

Cultivating Your Practice

By John Manganaro | November/December 2016

It also appears from the Schwab analysis that advisers have come to grips with a future that is to be dominated by the fiduciary standard and restrictions set up by the Employee Retirement Income Security Act (ERISA)—at least when it comes to servicing defined contribution (DC) or individual retirement account (IRA) clients.

It does not appear, however, that advisers believe building a stronger fiduciary relationship with greater numbers of clients will necessarily require more face-to-face time. Many will take advantage of video conferencing and social media platforms to connect in new ways. In fact, according to the research, advisers believe technology will have a profound effect on the way independent firms do business over the next 10 years—as more than three-quarters (78%) believe technology-based process changes will be “noticeable compared with how their firms operate today.”

Both the Cerulli Associates and Schwab research urge advisers who feel reluctant to divorce themselves from the day-to-day management of client dollars to consider the positive scale-building opportunities such a move presents.

“Fewer investment decisions frees up advisers’ time, allowing them to focus more on the broad scope of their client relationships,” Sweet concludes. “Cerulli suggests that advisers view models and other outsourced resources not as a conflict to their value proposition, but as a complement to their investment process. Creating a standard starting point for investing client portfolios can help advisers scale their efforts while allowing room to tailor the end portfolio to suit individual clients’ needs.”

Digital Processing Will Be Fundamental
Adding some practical suggestions to the findings from Schwab and Cerulli, Tom Embrogno, chief information security officer (CISO) for Docupace Technologies, a technology solutions provider for the financial services space, in Los Angeles, suggests there is “no doubt that straight-through processing is a very exciting prospect for the financial services industry, given everything that is being discussed and debated in the marketplace.”

For those unfamiliar with the vernacular, Embrogno explains that straight-through processing simply refers to the capability of a firm to enact the entire client onboarding and service process completely electronically, without the need for re-keying or manual intervention by human staff once a decision has been made. Looking forward, Embrogno says, such capabilities will be absolutely fundamental for firms that want to maintain strong growth prospects under the new fiduciary standard.