Complex but worthwhile changes in the technology used by advisory practices require careful due diligence and a healthy skepticism about the so-called human capabilities of robots, according to experts.
In three sessions at
For example, the common
"Is behavioral finance disruptible by artificial intelligence?" Crosby said. "Well, to answer that question, I think we have to look at what AI does well and what we do well as humans. There are places where the AI is going to win. Any task that requires consistency, tedium, speed, recall, memory, AI is going to be better than us all day long. But when it comes to things like connection, creativity, empathy and sales, that's where humans really shine."
Technology-powered transformation poses big potential benefits for advisory practices that no longer find value in their technology, but the tools come with inherent challenges for planners as well. New York-based registered investment advisory firm
Prior to the move, her team spent four years testing whether their existing CRM could fit their multigenerational firm, where individuals within households often have varying needs from their RIA's technology, Francis said. Implementing a new software "can be hellacious on the staff members," she noted. Ultimately, Francis decided that Salesforce offered better capabilities for her firm, even though she knew that the process would cost time and money.
"Something that is very well-documented is that, when firms change technology in a big way, whether it's your portfolio reporting or CRM — we're not just talking about like using a new newsletter, talking about the big technology — those firms actually underperform for typically about a year, sometimes even more from a growth and financial perspective. Why is it? It's because it takes a while for your individuals, your employees, yourself to get up to speed on that technology," Francis said. "Just be careful, be very thoughtful about when you change technology or when you add technology."
Bellevue, Washington-based
The firms' collaboration stemmed from a joint goal of "making these intangible products, intangible services tangible for clients," an easier transition to the new solutions and a close strategic relationship, CapIntel CEO James Rockwood said.
"You will not get technology adopted and get that technology well implemented unless you invest in a relationship with your tech provider," Rockwood said. "Your tech provider [investing] in a relationship with you that goes beyond just the financial budget holder, and goes into anybody who's going to touch that software having at least somebody or a representative of that group at the table aware of what's going on and talking about it — I think that's really important, because that's a big component of what we did to make this happen — is something I think is key to any sort of success."
As advisors think through the difficult questions surrounding how best to use technology in their businesses, they should put themselves, their clients and their teams at the center, Crosby said. Out of "a little three-part hierarchy of behavioral change," he said that AI "excels at" education and environmental adjustments. A third aspect, encouragement, is "where advisors really shine," Crosby said, noting studies suggesting that advisors boost the wealth of their clients over peers with the same level of income and education.
"The reason is primarily because of this third piece, this encouragement piece, where advisors are able to swoop in at the opportune moment and save that client from three to five horrific, life-altering bad decisions over the course of an investment lifetime," Crosby said. "That's where we thrive."
