5 Solutions to Your Advisory Firm's Technology Struggles

5 Solutions to Your Advisory Firm's Technology Struggles

5 Problems and 5 Tech Solutions learned at the T3 Tech Tools Conference

Numerous advisory firms are struggling with:

  1. Reducing the workload
  2. Climbing out of the “weeds” of operations
  3. Managing costs
  4. Finding more time to nurture relationships
  5. Managing staff

Although we know that best-used tech can be a very affordable solution to many of these issues, less than .10% of RIA firms attended T3, which is the most tech-heavy conference in the RIA industry. The great thing about T3 was the attendees were there to SOLVE their problems and finish researching solutions so they could IMPLEMENT.

For all those firms that didn’t go, we have summarized the 5 solutions that advisors learned. For those seeking a comprehensive review of T3 and all the tech providers, you can read Kitces article.

Key Lessons Learned at the T3 Tech Tools Conference:

  1. ROBO does not mean a robot is managing the clients’ portfolio. It could mean that the client is emailed a website URL link to paperwork that they can fill out online and e-sign. It could mean that the client is emailed a URL link to a risk questionnaire and once completed, auto-chooses the investments that you already researched and choose. Or it could mean that your client portal contains a few links to questionnaires and paperwork  to complete. ROBO is an automated workflow and it comes in all shapes and sizes.
  2. PFM Personal Financial Management is the tech tool that allows consumers to enter the login and password to their checking, mortage, investment, and other asset and liability accounts. A PFM auto-produces the most current Net Worth Statement.
  3. Appointment schedulers don’t require you to publicize your calendar on your website nor do they require every person be forced to use the URL link to schedule time with you. This tech allows you to provide someone several options for reaching you on the phone or in person. It makes you more accessible.
  4. Client portals aren’t required for clients to use. They are one of the many options you provide to people that want 24/7 access to their financial statements, net worth, estate documents, commentary, and more. And the contents of the portal is important so choose the portal that provides the information that your clients value the most.
  5. Workflows are not scary but rather a necessity. Workflows are just written processes that guide people on what to do, when, and how. So many firms avoid writing out their workflows as they are scared to see what their gut knows – inefficiencies and time wasters. We coached several firms to get over their fear and wipe board the workflow of one problematic area of their business. Just like magic, light bulbs went on. The inefficiencies were so glaring that it was easy to identify tech solutions to reduce the pain.

So where to you go from here? Seeking operational excellence? Drop us a line by connecting HERE

Jennifer Goldman
Operational Excellence
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Jennifer Goldman is founder of My Virtual COO and comes to us with 20 years' experience optimizing the use of tech and people to improve RIA firms' productivity and profitabil ... Click for full bio

Sizing up Strategic Beta

Sizing up Strategic Beta

Interest in strategic beta ETFs is rising. A few simple guidelines can help investors pick from among the often-bewildering number of options.

The number of strategic beta ETFs has grown at 20% a year, consistently in good markets and bad, since the year 2000.[2] With good reason: Strategic beta ETFs offer a more thoughtful passive option than cap-weighted indexes—and they can do so with a more transparent process and lower fees than actively managed funds.

Bright future, dim past    

All well and good, but how should investors assess any particular strategic beta ETF? Close to 40% of these funds have been in operation for less than three years[2]. This lack of an established track record can make it hard to validate their claims. ETF sponsors may try to make up for that shortcoming with back testing, running simulations of holdings they might have had against actual past market performance, but that has its limitations:

Back testing doesn’t always account for fees, liquidity or transaction costs.

Back tests are “selection biased”—that is, back testers have a tendency (conscious or not) to engineer positive outcomes. Live outcomes are therefore likely to be inferior.

Too great a focus on recent history can lead to “driving in the rearview mirror.” While an index or ETF may solve the problems of yesterday well, an investor’s focus should instead be on solving the potential problems of tomorrow.

Three steps to an informed judgment

Because the indexes tracked by strategic beta ETFs are by design somewhat exotic, effective assessment of them calls for some digging:

  1. Investors first have to understand who the index designer and asset manager are (they may not be the same people). They should have a clearly expressed investment philosophy and the expertise to enact it in practice.
  2. The properties of the portfolio should reflect the investment philosophy. Not only does the transparency of ETFs allows examination of the holdings to ensure that this is the case, it also measures such as active share relative to a cap-weighted benchmark or turnover can indicate whether an ETF is performing as designed.
  3. Performance can also be used to confirm that an index is doing its job. While short-term results shouldn’t be given too much sway, the index designer should be able to explain when and why an index will perform and when it might not.

One key aspect of performance shared with traditional passive management is tracking error. Like earlier cap-weighted index tracking funds, strategic beta ETFs should have minimal tracking error to their own indexes. Beware, though, the tracking error to the benchmark can be large and dynamic, it is by this differentiation that strategic beta adds value.

Made to measure

Strategic beta does not defy analysis, despite its novelty. Indeed, it has a lasting advantage over standard active manager due diligence. Strategic beta, after all, is rules-based. What an investor sees in straightforward, well thought-out index composition rules is what the investor will get. In that sense, strategic beta is relatively immune to the personnel changes, style drift and index hugging that can challenge actively managed mutual funds.

Learn more about ETF due diligence here.


This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor’s own situation.

Opinions and statements of market trends that are based on current market conditions constitute our judgment and are subject to change without notice. These views described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. ETF shares are bought and sold throughout the day on an exchange at market price (not NAV) through a brokerage account, and are not individually redeemed from the fund. Shares may only be redeemed directly from a fund by Authorized Participants, in very large creation/redemption units. For all products, brokerage commissions will reduce returns.

J.P. Morgan Asset Management is the marketing name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. J.P. Morgan Exchange-Traded Funds are distributed by SEI Investments Distribution Co, One Freedom Valley Dr., Oaks, PA 19456, which is not affiliated with JPMorgan Chase & Co. or any of its affiliates.

For additional disclosure 

For a longer discussion, please see our recent publication Strategic Beta’s due diligence dilemma (J.P. Morgan, April 2017).

[1] Morningstar.

[2] Morningstar.
J.P. Morgan Asset Management
Empowering Better Decisions
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See how ETFs differ from other investment vehicles, learn how to evaluate them, and discover how ETFs can be used effectively to achieve a diversity of investment strategies. ... Click for full bio