Blog

Honors for Innovative Wealth Management Companies

February 19, 2013 by JP Nicols

My friends and former colleagues at U.S. Bank’s Ascent Private Capital Management recently won “Best Newcomer- Private Wealth Manager” and was highly commended for “Best Multi-Family Office- Client Service- Over $2.5 Billion” in the 2013 Private Asset Management (PAM) Awards in New York.

Congratulations to the entire team!

___________________________

Separately, Fast Company listed “The World’s Top 10 Innovate Companies Companies in Finance” as a part of their Most Innovate Companies in 2013.

Three companies that work in the investing/wealth management space were included on the list:

#2 OpenGamma – “For cracking the secret world of capital markets by creating open-source risk-management software.”

#9 Riskalyze- “For helping individual investors assess risk, using personalized algorithms and portfolio alerts.”

#19 SigFig- “For becoming the online portfolio doctor, highlighting overpriced funds and suggesting alternatives within seconds.”

Read the entire list here.

FinovateEurope 2013 Best of Show Winners

February 14, 2013 by JP Nicols

By Jim Bruene on February 13, 2013 4:24 PM

Our third FinovateEurope wrapped up a few hours ago. At the end of each of the two jam-packed days, the London audience voted for their favorite three demos. The top eight overall were named Best of Show (see notes).

The winners (in alphabetic order):

Credit-Agricole for its app store where it is wooing outside developers
ETRONIKA for its BANKTRON e-channel management platform
mBank with Efigence for their Facebook & social platform
Meniga for its PFM platform, including “buy” vs “not buy” feature
Moven (Movenbank) for the worldwide launch of its mobile-optimized bank
Pockets United for its group purchasing mobile solution
SumUp for its mobile point-of-sale system
Virtual Piggy for its kids’ payment system with parental controls

We’ll have videos of all 64 demos posted at Finovate.com within a few weeks.

Congratulations to the presenters for our first Finovate with zero demo fails (sure their where a few glitches here and there). And thanks to everyone who attended, tweeted, networked, blogged, and set up an enormous number of post-show meetings. You are pushing fintech forward, and consumers everywhere will benefit.

———-

Notes on methodology:
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.
2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their three favorites.
3. The exact written instructions given to attendees: “Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed.”
4. The eight companies appearing on the highest percentage of submitted ballots were named Best of Show.
5. Go here for a list of previous Best of Show winners.

(Reblogged from Finovate)

So God Made an Entrepreneur

February 8, 2013 by JP Nicols

And on the eighth day, God looked down on his planned paradise and said I need someone with a vision-

So God made an Entrepreneur…

God said I need somebody willing to get up before dawn, sketch ideas on a whiteboard, work all day in a coffee shop because she can’t afford to rent an office, work on the whiteboard some more, eat some bad pizza then go downtown and stay past midnight at a meetup of likeminded souls-

So God made an Entrepreneur…

God said I need somebody willing to work into the night for a year with a new company, and watch it die, then dry his eyes and say maybe next time. I need somebody who can solve a problem no one has ever solved before, make a whole company out of a laptop and a mobile phone; who can create market value out of an idea, a couple of friends and a lot of sleepless nights; who at launch time and funding season will finish his forty hour week by Tuesday noon and then, paining from keyboard back, will put in another 72 hours-

So God made an Entrepreneur…

God said I need somebody strong enough to throw away 6 months of work when customers don’t adopt a new feature, yet gentle enough to sit and listen to a new employee who wants to quit; who will stop his work early to volunteer at the community food bank. It had to be somebody who’d learn to code on new platforms and not cut corners; somebody to found, launch, iterate, pivot and fundraise and manage and lead and take out the trash and keep the team’s spirits high and replenish the self-esteem and a hard week’s work with a five-mile bike ride home. Somebody who would bring a team together with the tough, strong bonds of sacrifice; who would laugh and then sigh, and reply with smiling eyes when his son says he wants to spend his life doing what dad does-

So God made an Entrepreneur.

To the entrepreneur in all of us.

(This post was inspired by Paul Harvey’s “So God Made a Farmer” and the 2013 Dodge Super Bowl Ad, I originally wrote it for the great folks at FounderSync, where you will find plenty of real entrepreneurs.)

Rebuilding Trust in Banking

February 6, 2013 by JP Nicols

Two recent reports show both the contrast and the convergence of the financial services and technology industries.

The 13^th annual Edelman Trust Barometer again showed the banking and financial services industries as those least trusted by respondents, while the technology industry topped the list. Separately, Oliver Wyman released a report on the financial services industry entitled “A Money and Information Business”. What can bankers learn from these reports, and how can they apply the lessons to improve trust in banking?

Nearly any public discussion of this topic, particularly one outside the industry, will focus on the need to create strong rules, enforce them swiftly and surely and punish violators. For the sake of discussion, let’s say that those elements are put into place and that your particular firm has a strong culture of ethics and compliance, and strong internal controls. That may help, as 25% of survey respondents perceived “corruption” as a primary cause of the industry’s recent scandals, but will that be enough to rebuild trust?

Not according to Edelman, which lists 16 specific attributes grouped by into five of what they call “performance clusters”, including Engagement, Integrity, Products & Services, Purpose and Operations, ranked in order of importance. In other words, operating fairly, ethically and within the law is necessary (and hopefully obvious), but insufficient to rebuild trust in an entire industry.

Opportunity in Privacy and Security

The lone bright spot for the banking industry on the survey was “ensuring the privacy & security of customers’ personal information”, an area where the tech industry has had a few challenges. Malware, privacy concerns, data breaches and system outages have largely been isolated and contained, but will these areas will need constant vigilance by all industries. But for the most part, people trust technology even more today than in the past, and this is also reflected in the survey results.

Think of the slow initial adoption rates of online banking, bill pay, PFM and other services. The major concern was the sharing of personal data, but this has been allayed for many because of repeated positive experiences by users and by ongoing improvements in technology and security.

Money versus Information

The Oliver Wyman report concentrated on a change in the balance of money and information over the past 20 years. Key characteristics of money in the financial services industry (risk-free rates, the level recent losses and leverage) have moved from high to low, while key characteristics of information (cost of producing and storing, the level of data coverage and the usability to make decisions) have move from high to low.

The result is a long list of opportunities to leverage the power of information to improve profitability, target better advice and offers to customers, better understand client behavior and price sensitivities and assess and manage risks better.

Could leveraging these capabilities in banking help improve the public perception of trust and responsiveness? Maybe. Topping the Edelman list of performance clusters in importance is “Listens to Customer Needs and Feedback”, an area where the tech industry generally seems to be perceived as strong. It is also an area where some in the banking industry have revealed a tin ear. Unpopular rules and practices around overdrafts, debit card fees and foreclosures have met with loud resistance that seemed surprising to some within the industry.

Ben Boyd, global chair of Edelman’s corporate practice believes that the tech industry is perceived as forward-looking, with “competitively priced products that improve the quality of people’s lives”. This is a potential area to build on. Banking products can help make small businesses thrive, help people save for education and retirement, and help finance the purchase of family homes.

Technology can certainly help, but the important thing will be to stay customer-focused and work on solving problems that people care about.

Wealth Management Innovation: Finovate Europe Preview

January 30, 2013 by JP Nicols

My friends from Finovate are taking the show back to London February 12 & 13, this time extended to two days to fit in 64 innovative companies. Here are a few sneak previews of companies I will be watching relevant in the wealth management, PFM and investing space. (via post show videos, though I will again be there live for Finovate Spring May 14 & 15 in San Francisco)

Financial Simplicity

Learn how Financial Simplicity’s portfolio business management infrastructure enables wealth firms to operate thousands of individually tailored investment portfolios efficiently and compliantly.

It will reveal how portfolio management can blend new world social relevance with operational excellence. Specifically, Financial Simplicity will demonstrate:

Whole of firm portfolio mandate and compliance monitoring in a single screen
On-demand portfolio analysis within a socially relevant context
Investor-tailored portfolio modelling at the click of a button
Implement pre-compliant portfolio decision-making across a Centralised Investment Proposition in a matter of seconds

IND Group

Story of My Finances is an entirely new approach in digital financial customer service. It takes online banking and PFM to the next level of mass retail financial planning and advice.

Stories are customer-driven financial life processes, such as How to spend less, Prepare for a rainy day, Buy a home or Retirement planning. Stories help end-customers to get financially fit and to have a peace of mind. Stories are the missing link between everyday people and financial products.

We believe that we can improve people’s financial life by licensing our white-label technology to financial institutions.

rplan

Investing can be time-consuming. rplan has created a simple, easy-to-use tool to create your own personal investment portfolio from over 2,4000 available investments to find the ones best suited to you.

rplan is for customers who want choice, but who don’t want to become finance specialists just to manage their investments – because there are better things to do in life than researching mutual funds.Innovation type: Investing & asset management, online, PFM

More information

For more information and previews on all of the presenters, visit the Finovate blog.

Technology in Wealth Management: Opportunity or Threat?

January 24, 2013 by JP Nicols

(This is an excerpt from an article I wrote for the William Mills Agency’s 2013 Bankers as Buyers report. Click here to download the entire article, plus 40 more pages of “research, observations and articles about what technology solutions and services U.S. bankers will buy in 2013 and the changing financial industry landscape.”)

**Technology Challenges in Wealth Management**

Technology companies like to describe their role in a ‘value stack’ for clients. In banking, the value stack is comprised of three primary sets of activities undertaken for the benefit of their customers. The first set is balance sheet activities—gathering deposits and making loans. The second set is payment activities—moving dollars and data from point A to point B. The last set is advisory activities—providing expertise and advice. Most bank departments can provide some combination of all three activities, but wealth management is primarily about deploying intellectual capital to help clients grow, protect and transfer their wealth effectively and efficiently.

Technology has generally been more of a threat than an opportunity to the wealth management business over the past twenty years, as financial information became more easily accessible and online brokers democratized trading platforms. Firms that made money simply by being gatekeepers of asymmetrical information evolved or died.

Self-Service Alone is Not Enough

Most financial firms have tended to allocate their tech spending to two extremes; either for enterprise needs to meet compliance mandates or improve internal operations (ERP, CRM, core systems, trading platforms, etc.) or to enable self-service for their customers (ATMs, online banking and brokerage, mobile banking, etc.)

Survey results fluctuate during different economic environments, but over the long run, roughly a quarter of clients prefer self-service in managing their money. A slightly smaller group wants to pay someone else to do just about everything, but most clients fall somewhere in the middle. They don’t want to pay excessive fees for services they don’t want or use, but they want advice when they want it, usually related to a change in circumstances, such as an inheritance or a major life change.

In other words, self-service alone is not enough, and firms will need to invest in technologies that can scale profitable advice delivery.

**Technology Opportunities in Wealth Management**

Financial institutions of all sizes want to improve their business with affluent and high net worth customers, and technology can definitely help banks address these challenges, but the payoff can be elusive, as I’ve written about before in the Clientific blog. Merely implementing a piece of technology without the context of delivering true value to clients will typically become an expensively disappointing project. The gap between high expectations and the longer growth curve of real value often leads to the ‘hype cycle’ that Gartner describes so well, (and which I have also previously described in a broader wealth management context). The gravity of reality will inevitably pull banks down from the Peak of Inflated Expectations and into the Trough of Disillusionment.

Download the report to read the entire article…

P.S. – The consulting firm Oliver Wyman has recently reached similar conclusions in a new report that is worth reading: A Money and Information Business: The State of the Financial Services Industry 2013

This year’s State of Financial Services examines the industry’s greatest opportunity, and its greatest threat: information…

You may be reading this paper on a tablet. You would not have read our 2008 report that way. You may use your smartphone for travel directions, reading the news, getting stock quotes, making bookings and listening to music. You didn’t five years ago. You may connect with your friends on Facebook or watch movies on your laptop, streamed from the internet. Again, you probably didn’t do those things five years ago.

Yet, if you are a banker or an insurer, your work life has probably been little affected by the rapid growth of information. How do you now set prices, underwrite loans or policies, assess performance, segment customers and measure their satisfaction? Chances are your practices are much as they were in 2008 (or perhaps even 1998 or 1988). (Emphasis mine)

Source: Oliver Wyman http://www.oliverwyman.com/state-of-financial-services-2013.htm#.UQAWlKUZGB8

(P.P.S. – And if one of your new year’s resolutions was to fill up your digital reading list, head over to the Clientific site to download a free 28 page special report: Five Shifts that Define the Future of Wealth Management.)

Clients Do Not Want Help. Until They Do.

November 27, 2012 by JP Nicols

(This was originally published as a guest post for my friends at the management consulting and strategic communications firm Beyond the Arc: Understanding how customers really want help.)

On the same day I published a post about the sometimes disappointing allure of technology (Technology is Not a Silver Bullet), the always insightful Discerning Technologist Brad Leimer shared a a post from The Financial Brand on LinkedIn (Big Study Examines Retail Channel Preferences).

The study, sponsored by Cisco, showed strong consumer preferences for non-branch channels such as web, mobile, phone and ATM for many types of interactions. However, branches were the preferred channel for such things as “Apply for a loan” and “Support from banking representative”. (See below)

What explains the stark differences? First of all, as Ron Shevlin of Snarketing 2.0 says, just because a person visits a branch for help or to complete a transaction doesn’t necessarily mean that they prefer to do it that way. It may mean that the web site or phone representative was inadequate to meet the client’s needs.

Secondly, and not to get all snarkety myself (that’s Ron’s sole province), but clients really don’t want your help. Until they do.

Results Not Process

Much has been written about the so-called “customer experience”– everything that a customer comes in contact with during their lifetime interaction with your brand; direct and indirect, obvious and subtle, conscious and unconscious.

Successful firms correctly attempt to measure the expressed and latent needs of clients. The best keep in mind the words of the great ad man David Ogilvy, who has been variously quoted as saying multiple versions of “People don’t want quarter-inch drill bits, they want quarter-inch holes.”

I have long found inspiration in the work of now-retired Harvard Business School professor David H. Maister, and I have been using some variation of his 2×2 matrix below for at least a decade.

Maister uses a healthcare analogy to describe the key operational and profitability metrics of different departments, and I have found it useful to help financial firms think through their various activities and how they provide value to their clients.

Pharmacy (Low Touch/Standardized Process)

For a financial firm, these are the things that just need to get done quickly and accurately. For the most part clients have little preference as to how.

–

• Account Opening

• Transactions

• Balance Reporting

• Transfers

• Basic Service Issues

–

Nursing (High Touch/Standardized Process)

These are items that might need a little more hand-holding, even though the processes and protocols are still well defined, and good client-service skills can go a long way to improving client satisfaction.

–

• Standard Credit

• Product Advice

• Estate Settlement

• Discretionary Trust

• Complex Issues

–

Brain Surgery (Low Touch/Specialized Process)

These activities require specialized skills, but the real value comes from applying the expertise, not necessarily from the advisor/client relationship.

—

• Custom Credit

• Asset Allocation

• Basic Trust Admin

• Complex Assets

• Basic Estate Plans

–

Psychotherapy (High Touch/Specialized Process)

For financial firms (and especially wealth management firms), this is the top of the value chain. It’s what happens here that drives most loyalty/at-risk measures. Diagnosis is key, and it is from here where brain surgery may be prescribed.

–

• Goal Setting

• Financial Planning

• Complex Estates

• Succession Matters

• Nonfinancial Issues

• Moral Support

–

Bringing it All Together

Clients may well be willing to use your new app for certain things, utilize your web site to download transactions and contact your call center to change their address. Those things may improve your operating margins– as long as they work.

The face-to-face interactions that do the most to improve the client experience are not the ones that solve the issues that could have been (and should have been) solved via other channels (See two surefire ways to irritate your customers. It’s the ones where they are really receiving the time and attention from someone who understands their situation and their goals and is helping them get to where they want to be.

Clients don’t want your help. Until they do.