Financial Advisor Marketing & Technology

Marketing & Technology For Independent Financial Advisors

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Archive for December, 2008

Improving Efficiency Of Client Intake

The first time I saw a ticket kiosk at the airport, I was indignant. “How dare they make me ticket myself,” I thought. “Next thing you know, they’ll ask me to fly the damn plane!"

Soon enough, however, I tried the self-service ticketing machine. And guess what? I loved it! Now, when I walk into an airport without a self-service kiosk, I’m indignant. How dare they make me wait on a long line just to be ticketed!

The reason I’m telling you about this is because we just added a self-service option to our client portal platform. It enables advisor clients to fill in forms that until now had to be filled in by you or your staff.

On a day when the U.S. auto industry has been pushed closer to the edge of disaster by the Senate, I am not expecting this news to get much coverage. But it is a significant step toward making client intake more efficient by using the Web, a new trend that must continue.

For more people to gain access to professional financial advice, the Web must be used to increase efficiency at advisory firms. Since clients must collect all their demographic data anyway, allowing them to fill it in on their own makes sense, and it is unlikely they will mind doing it. Just as airline passengers no longer find self-service ticketing a hassle, advisor clients will come appreciate not having to come to your office to give you this data. Doing it online is convenient, time saving, and efficient.

To create our customer-driven form-filling machine, we’ve partnered with Laser App, a leading form-filling application. When your clients fill in their data at your website, you can review it. Then, you import it into Laser App, which feeds 21,536 at about 300 brokerages, clearing firms, and other institutions.

Laser App provided us a list of 135 data fields commonly used in the forms it supports. We created an online form with those 135 fields. When a new client signs on with you, you ask him to fill in his personal data. After reviewing the data, importing directly into the Laser App’s desktop application is simple.

In addition, you can also import the data filled in by a client into a Comma-Separated Values (CSV) spreadsheet in Excel. Many CRM, financial planning, and portfolio accounting systems accept data from a CSV file, and you can thus import the personal data filled in by a client’s into these applications.

Clients no longer have come to your office to provide all this data piecemeal, and your staff will no longer spend as much time on this chore.

To learn more about our form filling tool, please view a video about our portal system and click on "Form Filling" in the index of the video.

Putting The Macarena, Charles Barkley & 10-Year Stock Returns In Perspective

Ten years ago, Will Smith was a rapper, Wikipedia did not exist, Charles Barkley—now running for Governor of Alabama—pleaded no-contest after allegedly throwing a bar patron through a plate-glass door, and many of us were still dancing the Macarena. A lot can happen in 10 years. Hey Macarena!

That’s why, in financial circles, 10 years means a lot. Ten-year returns have a ring of authority, bestowing an imprimatur of long-term success or failure on an investment manager or strategy. Ten years would seem to be long enough to smooth market bumps. It would seem to be long enough to include all kinds of weird market events. It would seem to be long enough to use as a predictor of future events.

It’s not. I hate to burst your bubble—after all, so many bubbles have been bursting lately—but a recent report from The Vanguard Group shows the follyCharles Barkley Mug Shot of relying on the predictive value of 10-year returns . The report, “The ‘Lost Decade’: Rational Expectations in Uncertain Markets,” is co-authored by Fran Kinniry, who happens to be the featured speaker at this Friday’s Financial Crisis Webinar.

Kinniry, along with co-author Christopher B. Philips, says in the report that the beauty of 10-year returns can be fleeting. For the decade that ended June 30, 2008, the broad U.S. stock market returned just 3.53% a year—and that, of course, was before the recent market rout. (Stocks in this period under-performed bonds, which had an average annual gain of 5.68%.)

Just a few years ago, stock performance looked much better. Kinniry, who runs Vanguard’s Investment Strategy Group, says that at the end of 2002, coming out of the most punishing bear market in 70 years, the 10-year average annual return for stocks was a perfectly respectable 8.74%. As the end of 2004, the 10-year average annual return on the Standard & Poor’s 500 stock index, was a very healthy 11.92%. And the average annual stock market return for the decade that ended in 1999 was an astonishing 18.11%.

Rearview mirrors, known for making objects appear bigger than they are, distort our view of the future as well as of the past. “The challenge for advisors will be to put the historical results in perspective, presenting them as one somewhat unlikely path that stocks can follow, not as a reasonable basis for expectations of future performance,” says Kinniry.

To learn more, you are welcome to attend this Friday’s session. If you’re thinking of voting for Barkley or want to brush up on your Macarena moves, you definitely want to attend.

Surprise! Account Aggregation Works!

I’m shocked that it works so well, surprised it was not more complicated to set up, and amazed at how useful it is. I’ve got to admit that account aggregation from Advisor Exchange is good! It may even be on the way to becoming great!

The reason why I was so surprised is that account aggregation has taken so long to come of age that I began to think it might never really work. You see, when account aggregation first appeared a little over a decade ago, I was one of the first people to write about how great it was. I never thought it would take 10 years to get it right!

What happened? Like so many Web wonders, the excitement surrounding account aggregation in the heady dot-com days of the late 1990s gave way to real world problems. Formidable obstacles to adoption had to be overcome before aggregation could be used in an advisor’s practice.

One obstacle was that it was complicated to implement. A decade ago, no one had online accounts and almost nobody felt comfortable putting personal information online. Yet advisors had to convince clients to set up online accounts with brokerages, banks, mortgage companies, credit card issuers, and insurers, and then they had to pass on their user IDs and passwords to your firm. Or advisors had to do all of the paperwork and set up their clients.

Another obstacle to adoption was the increasing complexity over the last 10 years in online security. A second layer of authentication, known as “site keys,” was installed by banks, and institutions began automatically suggesting clients change their passwords every six months. With log-in parameters constantly changing, an account aggregation application might work one day and fail the next.

After the dot-com bust, funding for development of aggregation applications dried up. Many advisors gave up trying to make the troubled systems work. I, too, gave up on it and don’t recall writing about account aggregation in my magazine column more than once in the past 10 years.

So it was with great skepticism that I tried again recently. I acquiesced to requests from Advisor Exchange to create an interface displaying aggregated account data on our Personal Client Portal Platform. Whenever a client logs into his Personal Client Portal, a single sign-on with Advisor Exchange pulls in snapshot of all his accounts from brokerages, insurers, banks, credit card companies, mortgage banks, 529 Plans, 401(k) providers, and the full range of other financial product providers.

Following several months of development, the interface was finally completed two months ago. All I had to do was set up my own accounts to test the interface. It took me two months to do this! Which brings me to the main problem with account aggregation: the hassle involved with inputting your accounts passwords.

Truth is, I delayed inputting my account data for weeks because I assumed it would be a giant hassle. I assumed nothing much had changed with account aggregation. I was wrong. It was actually pretty easy. Take a look at the screen shots and you’ll see how the handful of real accounts—ranging from stocks held at Schwab, a 401(k) held at T. Rowe Price, and bank accounts are being aggregated. It took me about an hour to set up an aggregated view of six accounts.

Like I said, I am amazed that it works, that the data are useful, and that it was easy. Surprise! Account aggregation works!

For more information about the Advisor Products Account Aggregation interface with Advisor Exchange, call Barry Weinstein at Advisor Products at (888) 274-5755.

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