Tech Tips

Survive the wealth transfer with these advisor tech tips: Q&A with AdvisorEngine CEO Rich Cancro

Baby boomers are retiring at an alarming rate. In a decade, the entire generation of some 74 million boomers will have reached the age of 65 or older. This will usher in a $30 trillion wealth transfer, according to industry research.

While client retirement is a job well done for advisors, it also means a decumulation of assets. In order to scale, advisors will not just need more assets but a new kind of client, says Rich Cancro, CEO of New York City-based AdvisorEngine, an enterprise platform provider.

Successfully attracting the next generation requires a tech-friendly strategy that advisors may not be familiar with, like a strong online presence and mobile offering, he says. “A millennial will not have a relationship with you in most cases unless you have a great offering from a technology perspective,” Cancro says.

Millennials want enhanced communication and readily accessible products, but wealth management is one of the “least tech-literate sectors of the financial industry,” according to PricewaterhouseCoopers. This is one reason that leads over 12% of advisors to report the wealth transfer as their primary business risk.

Portraying yourself as a modern, user-friendly firm is more important than ever, Cancro says. In fact, half of millennials have eliminated an advisor candidate based on online information, according to a company survey of 750 investors.

To that end, the firm acquired CRM software provider Junxure last year and redesigned its architecture to support client growth. The deal also came with an additional $30 million funding round from backer WisdomTree Investments to fund the purchase.

While updated technology might not be as important for older clients, advisors should consider stepping up their onboarding process to help alleviate pain points. “I was at a conference recently, and an advisor was describing how they onboard a client,” Cancro says. “They sit in a room with their admin and the client for two hours to fill out paperwork. And that’s in 2018 — a two hour process.”

Cancro sat down with Financial Planning to discuss the biggest hurdles facing advisors and the tools that will be instrumental in the advisor toolkit in the coming years.

What is a big hurdle preventing advisor growth?
Online presence of an advisor. That can mean their profile on a website, LinkedIn, their use of social media. If you take a step back, advisors typically think that this is a referral business. And that is true by nature. However, as we move forward, advisors really have to pivot to an area where they’re not strong in, which is marketing. And the first place that starts is uplifting your entire online presence.

Why do they need to pivot?
Advisors are utilizing their network and colleagues and getting involved in community activities. They’ve done a phenomenal job with that. Now as these larger firms and more advisors and more online offerings have now manifested, they need to look beyond their local communities to grow. And to do that, you have to add a marketing component.

Why is this so important?
A key thing advisors face is that their clients are baby boomers. They are moving into the retirement phase, or they’ve already started the retirement phase. By nature, a big slot of your client base is actually moving assets out to maintain their lifestyle. It’s even harder today just to maintain your assetflow.

What kind of organic growth should they be striving for annually?
Everyone should have at least have a 10% number in their head — of net assets.

How should they approach the next generation? 
The best way to form a relationship with Gen X, millennials or Gen Y is certainly with technology. Historically, a lot of advisors have not focused on these clients because it’s a smaller relationship. It’s harder for them to manage and so forth. And a lot of times parents don’t share anything with their kids about their wealth. Providing a great mobile and web experience is an awesome way to start connecting with that generation.

What new tools can advisors expect to see this year in the fintech space? 
I do think there’s going to be a significant uptick in 2019 in terms of data, analytics and artificial intelligence as different providers across the ecosystem start to enable AI. I think Voice will be a big part, too. I think we’re really early on that journey. The offerings of these products are in the early stages, probably in the first or second inning.


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