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Wealth Management Technology & Cybersecurity Summit Recap

9/22/16 10:30 AM / by Robin Brown

Here are highlights of the powerful insights that industry leaders shared at our inaugural event.


We were honored that some of the most respected leaders in wealth management technology and cybersecurity joined us Monday, at the Microsoft Conference Center in New York, for our first summit. These experts shared powerful insights about successful software adoption, the breakaway broker trend, succession planning, millennial priorities, regulatory developments, and more. Here’s a summary of highlights from the event.

Industry Overview

Sam Attias, managing director of business development at External IT, opened with a reminder that the world has experienced four industrial revolutions so far. Our current one hinges on big data’s ability to connect many different kinds of people and devices, while also fostering the growth of artificial intelligence tools. This revolution will not make wealth managers obsolete, but it will force them to change their business models.

Justin Kapahi, technical director at External IT, put the scope of cybercrime into perspective with a few startling statistics. The global market for stolen vehicles is $56 billion annually. The global market for cocaine is $85 billion. And the market for cybercrime is as much as $400 billion by some estimates. That’s comparable to the GDP of a small country. Hackers get more sophisticated by the day. For instance, eventually it will be possible to 3D print a fake finger and use it to access sensitive data “protected” by biometric tools. 

Breakaway Tips

Paul Metzger, chief technology officer at Dynasty Financial Partners, acknowledged that breakaway wealth management firms must decide exactly how tech-focused and exactly how turnkey they want to become. CRM and portfolio management tools are only as good as that data going into them, the people using them, and the objectives they aim to meet. Firms that use a CRM tool for operational efficiency have different needs than firms that use CRM for business intelligence or compliance purposes. Making these decisions alone can be daunting for firms, which is why they can benefit from the guidance of key partners such as custodians and technology specialists.

Tom Harms, chief operating officer at Summit Trail Advisors, encouraged breakaway RIA leaders to tap the natural competitive spirit of advisors by conducting weekly pipeline reviews. This prompts team members to keep accurate records on new business and motivates them to use automation features in software that processes such data. Another type of team meeting can address staff discoveries on how to use software more efficiently, with a focus on the tech value-add being easily demonstrable. 

Tech Adoption

Jennifer Goldman, president of MyVirtualCOO, sees development of the client portal tool as the main hurdle for wealth management firms to overcome. Increasingly, the client portal is becoming the standard mode of interaction for clients. How clients interact with the firm affects their experience and opinion about the firm. Yet too many firms see the client portal as an afterthought to their service offering. Building a dysfunctional client portal can be more costly than hiring a bad employee. Therefore, firms should hold monthly or quarterly calls with their technology vendors to voice issues and pursue solutions.

Michael Goodman, president of Wealthstream Advisors, noted that employees of all levels are integral to getting firmwide buy-in when adopting new technology. Executives ought to speak with staffers to learn their software concerns and what a new tool needs to do in order to improve that staffer’s workday. Similarly, determining the return on investment of new technology depends on its impact on the whole firm. In general, good technology will lower the time required to accomplish tasks while also increasing the satisfaction of employees and clients.

Succession Planning

Anita Venkiteswaran, vice president at Focus Financial Partners, warned that having a loose and informal arrangement with a fellow advisor is not a proper succession plan. That other advisor could lack the resources to suddenly double in size when taking on your business, or lack the ability to pay top dollar for your business if you need to sell in a hurry. Since many RIAs are cah rich businesses where a single owner has over 50% of equity, sellers can struggle to find internal partners to buy them out. That’s why private equity solutions ought to be considered.

David Mrazik, managing director at MarketCounsel, insisted that clients appreciate when firms inform them about succession planning. In fact, David could not recall hearing about a wealth management client becoming dissatisfied when a firm introduces competent new points of contact to help meet client needs as older advisors wind down their business.

External Forces

Jim Patrick, head of advisor services at Envestnet, said successful practices must adapt to major forces changing the industry: stricter regulations, evolving robo software, low interest rates, cost-conscious clients, and the aging advisor workforce. Outsourcing and technology integration are potential solutions to maximizing productivity and profitability. RIAs with tech integration enjoy 57% more clients served, 78% larger books of business, and 46% higher practice revenue than RIAs lacking integration.

Brian Hamburger, CEO of MarketCounsel, pointed out that while recruiting is the top method of inorganic growth among RIAs, the Protocol for Broker Recruiting is under strain from wirehouses and regulators. But that’s not the only big compliance issue firms must wrestle with. Hybrid advisors in particular may face challenges coping with the Department of Labor’s fiduciary rule, especially as it relates to IRA rollovers. Furthermore, it appears RIAs should beware not only what the SEC states as its top examination priorities, but also what its disciplinary actions suggest are unspoken SEC priorities.

Millennial Priorities

Mark Dupont, vice president at Focus Financial Partners, told advisors to consider using gamification tools to engage millennial clients about investing and saving strategies. The younger generation also is much more open to using mobile financial services apps such as Venmo and Mint.com.

Allen Eickelberg, technology, operations, and marketing consultant at Spire Investment Partners, spoke of how millennials prioritize authenticity in their personal and business interactions, living in accordance with social values, and seeking to have a positive impact on the world. Wealth managers seeking their business will have to show how the firm can satisfy those needs.

Cybersecurity Procedure

Eldon Sprickerhoff, founder and chief security strategist at eSentire, laid out his “dirty dozen” security event scenarios that wealth management firms must be able to spot and protect against: Malware compromise such as a ransomware attack. Social engineering such as a business email compromise. Internal infrastructure outage. Non-malware-caused local access without authorization. Remote access without authorization. Lost or stolen devices. Inappropriate internal behavior. Cloud service access without authorization. Internal data loss or extrusion. Direct financial loss. External denial of service attack. And a physical breach.

We at External IT wish to thank all those who participated in the summit for their time and ideas. If you would like to learn more about these insights, the companies involved, or the possibility of future industry events, please don’t hesitate to reach out.


Topics: Financial Services, Cybersecurity, Technology

Robin Brown

Written by Robin Brown

Robin Brown is VP of Marketing for External IT. Her expertise includes brand strategy and execution, marketing strategy and execution, product and services positioning and marketing, field marketing and demand generation, on-line and social media, public relations, corporate and internal communications.