The following is an excerpt of an article written by Eric Rasmussen for Financial Advisor Magazine, for which he interviewed myself and other industry experts about how technology is reshaping financial services. A link to the article in its entirety can be found below.
Philip Kessler, the founder and managing partner of SWS Partners in Columbus, Ohio, is quick to remind people that technology is not a business strategy. It’s not going to build your firm for you or make you grow.
What he likes about technology, however, is that it allows the robots to do what they do best while planners are doing what they do best. With a team of only five, his two-year-old firm has grown to $200 million from $80 million in assets in two and a half years. He says he could add a zero to that figure while adding only two new employees.
Source: Financial Advisor Magazine
“We knew from day one that we were going to have a heavy reliance on technology and a much smaller reliance on humans,” Kessler says of his firm, launched in late 2015.
A veteran of AllianceBernstein and Merrill Lynch, he struck out on his own with a partner when robo-advisors arrived on the scene a few years ago. Kessler saw the writing on the wall. The investment management part of the financial advice business has been commoditized, he says. Companies of the future will have no need for receptionists (his firm doesn’t have one). They can meet the clients on video, sign them up with e-signatures. Large firms with 35 staffers could today conceivably use technology to cut two-thirds of them, he declares. He thought it was time for him to join the revolution or die.
The revolution in fintech has allowed advisors to now do in minutes what it used to take them all day to do. In many ways, the clients are the ones doing the busywork advisors used to do—updating their own metrics on the cloud or blasting their spending behavior from Mint into the advisors’ portals. Robo-advisors are no longer thought of as threats, but advisors’ right arms, allowing the technology to handle the asset allocation. It’s not that humans have no role, but the roles are changing: They now must offer judgment, insight on the future, a sympathetic assessment of client psychology. In many ways, says Kessler, the tech revolution has forced advisors to show exactly what their value is: It’s the subjective part, not the calculating.
You may access the full article by clicking here.