In an overcrowded wealthtech space, high net worth-focused RIA firms and family offices are increasingly getting shortchanged, explains d1g1t Inc.’s Andy Aziz
The world of financial advisor-facing tech is becoming crowded. And, if anything, the pandemic has ratcheted up the level of competition, with firms and advisors having no choice but to lean more heavily on tech tools to streamline their operations. While it’s an exaggeration to say a new company enters this market each week, it may not be much of one.
Too often, though, the media and financial services insiders are guilty of focusing too much attention on U.S.-based startup activity in this area. All of which brings us to d1g1t, a Canadian fintech provider that has experienced a spike in growth over the last 12 months.
d1g1t’s most notable partnership is with CI Financial, a fellow Canadian company whose year-long acquisition binge has made waves in the North American RIA market. The firm’s most recent purchase of Dowling & Yahnke, a San Diego-based firm, brought its U.S.-based assets to $63 billion.
At the same time, d1g1t also has many RIA, multi-family office and broker-dealer clients throughout North America who focus on serving high-net-worth investors, the market best suited for the company’s offerings.
We sat down recently to discuss the lay of the fintech land with Dr. Andy Aziz, d1g1t’s executive vice president of business development.
What’s the one thing that firms and advisors serving high-net-worth and ultra-high-net-worth investors don’t get enough of from their technology?
Aziz: In a word, integration. In today’s digital world, where tasks are becoming increasingly automated, advisors and firms need tools that will set them apart and scale up the high-value human services they provide. This is not possible if they are routinely forced to toggle between applications to unearth information important to most high-net-worth and ultra-high-net-worth investors.
Folks like this want insights immediately, whether it’s their net worth, the value of their foreign currency holdings or how one household within the broader family is progressing toward its goals. Too often, it can take an advisor many days, if not weeks, to put together information like this for a client. That not only results in a poor service experience, but it creates a competitive disadvantage for the firm.
It seems safe to say that advisor-facing tech has lagged what other industries have had access to over the years. Is that a fair assessment? If so, has it changed? Why and why not?
Aziz: In my opinion, it’s very fair. The situation is getting better, but overall, wealth management tech still has a long way to go before it catches up with other areas within finance, such as banks and hedge funds.
For years, the industry has suffered from siloed, outdated and costly to maintain systems. Because of that, firms and advisors have struggled with some of the issues related to integration we just talked about.
Like I said, this hampers an advisor’s ability to provide timely insights. Beyond that, it also means they won’t have access to some information that is really important to providing clients a full understanding of their overall wealth. For instance, many high-net-worth clients have pooled investments. A lot of today’s systems have no way to capture that information.
The other issue is that client engagement tools have been slow to evolve. Take apps. They must be more than just some place to go to check a balance. If it’s possible for an advisor to pull up something on their desktop and show it to a client during a meeting, the client should be able to do the same thing on their phone whenever they want to.
What are the emerging tools and capabilities that will define advisor-facing tech in the years ahead, especially for high-net-worth-focused firms?
Aziz: Risk analytics tools need to get better. To the extent that most of today’s platforms offer risk analytics, they produce a set of abstract numbers that most clients – and even some advisors – fail to understand. That’s why we take a different approach. We augment standard risk metrics with scenario analysis tools that allow advisors to frame risk within a story.
Stories resonate better than stats or numbers. As a result, conversations between advisors and clients are more transparent and memorable, which tends to lead to better decisions.
Ultimately, we believe the value of a good financial advisor, enabled with the right technology and analytics to support their advisory process, can provide clarity in a world of complexity. Sometimes that comes down to something as simple as creating a memorable story.