Page 18 - Investment Advisor July/August 2023

INDusTRy INsIgHTs

By Timothy D. Welsh

The Trends Innovative Advisors Are Talking About

The fastest growing firms “rely the least on referrals,” says Michael Kitces,
which is leading to new marketing tools.

ne of the more interesting posi- tal solutions for advisors,” said Megan
tives that came out of the pan- Hausmann, director of Advisory Success
Odemic is the pent-up demand at Apex. One example of that muscle-
for attending industry conferences and flexing was the recent launch of the
events. A recent case in point: WealthStack Apex cash sweep program offering
2023, which was widely attended and yields of 4.25%, while incumbent custo-
recently held at the Diplomat Beach dians are paying close to zero.
Resort in Hollywood, Florida. It featured Of course, growth was an underlying
three days of nonstop tech demos, ses- theme across the conference, particular-
sions and networking. More than 1,500 ly now that industry research is reveal-
advisors, custodians, technology compa- ing that true organic growth for advisors
nies, industry insiders and experts were is declining dramatically, once market
all looking to better understand the state universe, which then creates a massive gains and M&A activity are subtracted
of wealth-focused technology. integration problem,” said Invent CEO, out. Industry guru Michael Kitces —
By far, the top topic being discussed Oleg Tishkevich. “What is needed is a of Kitces.com and Buckingham Wealth
most was artificial intelligence (AI) and digital ecosystem approach that advisors Partners — was the keynote speaker on
its many emerging uses in wealth man- control and design themselves, just like the event’s first day, and he shared recent
agement — most notably, how genera- the app store on the iPhone.” research that finds advisors are dramati-
tive AI, spurred on by the monumental Along these lines, the pendulum is cally under-investing in marketing.
popularity of ChatGPT, will fundamen- swinging away from each advisor building To illustrate this point, Kitces high-
tally alter how advisors will deliver their own tech stack with a “best in breed” lighted an example of what the lifetime
financial advisory services. Just about component, and then trying to integrate value of a client is in relation to what advi-
every panel discussion and presentation them together. Rather, a more efficient sors spend on acquiring a client. “A typical
dedicated some time to the AI topic. The approach is to provide a customizable, $1 million client’s lifetime value is any-
consensus is that AI, while disruptive, is flexible platform that provides multiple where from $60,000 to $100,000 based
unlikely to displace advisors. capabilities under a single experience. on the profitability of a firm,” he noted.
Everyone on stage seemed to agree that As Reed Colley, CEO of Summit “Yet our research indicates that the
it would be a great enabler to enhance, Wealth Systems, explained, “There are majority of advisors would only invest
elevate, expand and help drive scale for too many systems with ‘tech debt,’ mean- $2,500 or less to acquire that client, show-
advisors to solve investors’ very human ing that legacy platforms aren’t designed ing the massive disconnect advisors as
problems. Plus, virtually every speaker to solve today’s problems. Instead, we business owners are operating under, as
pointed out that we’ve already seen this need to humanize the approach, letting they point to referrals as the key to their
movie before, when robo-advisors entered the technology enable better conversa- growth,” Kitces explained. “Meanwhile,
the space a decade ago bringing low-cost tions versus the technology becoming the fastest-growing firms rely the least on
algorithms and digital experiences that the conversation.” referrals, which is why we are now see-
ultimately were adopted by us humans. Apex, the large fintech custodian ing an influx of marketing technology to
Another key theme was how to unify that already powers many popular digi- solve for this new paradigm.”
the technology experience for both advi- tal fintechs, is looking to make waves
sors and clients, particularly with the with their recent hires of former TD Timothy D. Welsh, CFP, is president, CEO and
proliferation of literally hundreds of Ameritrade executives who built the founder of Nexus Strategy, LLC, a leading con-
wealthtech solutions. “The industry has award-winning TDA Veo platform. sulting firm to the wealth management industry
been formed by every custodian and “We’re looking to flex our muscles and can be reached at [email protected] Adobe Stock
vendor wanting to be the center of the and superpowers for creating digi- or on Twitter @NexusStrategy.

16 InvesTmenT ADvIsor July/August 2023 | thinkAdvisor.com