Winning Advantage. Seeking Profitability through Technology Integration

Transcription

1 Raef Lee Managing Director SEI Advisor Network Winning Advantage Seeking Profitability through Technology Integration

2 Agenda Who is SEI? The Problem What is Technology Integration? The Real Business Impact The Value to the Advisor and the Client The Financial Advisor Playbook Current Options for Advisors The SEI Solution Winning Advantage Achieving Profitability through Technology Integration

3 Who We Are SEI is a leading global provider of wealth management solutions. We help professional wealth managers, institutional investors, and private investors create and manage wealth and enable their long-term success by providing solutions that are both comprehensive and innovative. A Market Leader Manages $204 billion assets 1 Administers $303 billion in client assets 1 Processes 1.6 million end-investor accounts 2 Leading global provider of Bank Trust technology 9 of the 20 largest North American banks are clients 2 A Successful Company Founded in 1968, a public company since 1981 (NASDAQ: SEIC) 2012 revenues: $993 million net income: $207 million 2 SEI Advisor Network 20 years of experience in providing outsourced solutions to independent advisors Over 5,400 advisors using SEI s solution $36.6 billion in advisors AUM 1 One-stop accountability with SEI Private Trust Company SEI is the #1 U.S. Advisory Third-Party Managed Account Provider 3 SEI recognized as most notable vendor in the Breadth of Functionality category by Celent 4. A Global Company 2,682 employees worldwide 1 1 As of June 30, As of December 31, Q 2013 Summary Cerulli Associates 4 September 12,

4 SEI Key SEI Business Segments Relevant to Advisors Private Banks Money Managers Institutional Investors *As of 6/30/13 4

5 The Problem Winning Advantage Seeking Profitability through Technology Integration

6 The Challenge of Bridging the Gap Aggregation By-All-Accounts CRM Junxure Custodian 2 Fidelity CRM Sales Force Custodian 3 TD Ameritrade Rebalancing irebal CRM Redtail Custodian 1 Schwab Analytics/Research Callan Financial Planning MoneyGuide Pro Analytics/Research Morningstar Financial Planning NaviPlan Rebalancing Tamarac Advanced Reporting Black Diamond Advance Portfolio Management Envestnet Advanced Portfolio Management Advent Reporting / Portfolio Management PortfolioCenter Rebalancing RedBlack Advanced Reporting emoney Advisor Advanced Portfolio Management Adhesion Document Management DocuXplorer Document Management Laserfiche 7

7 Technology Integration The Problem Advisors are facing the single most important era in the history of the industry: Increasing client demands The multi-trillion-dollar baby boomer retirement Lingering fears of continued market uncertainty Ongoing volatility Advisors waste an average of two days per week on operational tasks rather than servicing existing clients or acquiring new ones 8

8 What is Technology Integration? Winning Advantage Seeking Profitability through Technology Integration

9 Technology Integration What Does it Mean? An integrated technology approach should align with core business goals and the evolving needs of their clients, which will enable advisors to: Work smarter Connect with clients more often Provide more valuable information Simply buying new technology is not enough! 10

10 Technology Integration Global Trends 5 Key Trends in Wealth Management IT Spending 1 Increased attention on communication tools 2 Increased adoption of wealth management platforms 3 Increasing Channel client demands expansion 4 Integration 5 Outsourcing Source: Wealth Management IT Spending, A Global Perspective, Celent, October 22,

11 Technology Integration Spending Priorities Front Office: Wealth Management Platforms and Advisor Dashboards Central access for client information across systems. Platforms designed with an open architecture. CRM dashboards manage client interactions, documents, and third-party systems. Self-Directed Tools for Advisors Access to portfolio balances/ holdings, research, reports, alerts, & financial planning. Real time trade approval, service offerings and tools for the mass affluent. Mobile channels through both online portals and mobile devices. Channel Expansion Advisor and end-client use. Creating synergy between mobility and social media. Source: Wealth Management IT Spending, A Global Perspective, Celent, October 22,

12 Technology Integration The Rise of CRM CLEARING FIRM PORTFOLIO MANAGEMENT & FINANCIAL PLANNING Source: ActiFi Industry Experience / Forecast

13 Technology Integration Spending Priorities Middle/Back Office: Client Reporting and Risk Analysis Tools Integration Outsourcing Compliance Investors expect advisors to explain investment holdings proactively and efficiently. Clients expect more risk analysis metrics with the reports. Offers a complete view of the client s wealth. Aids in cross-selling across business units. Refocus on core strengths such as advice and product design. Noncore technology and operations infrastructure are increasingly outsourced Automate new regulations around cost basis reporting, FATCA, investment selection justification, etc. to mitigate time and expense. Source: Wealth Management IT Spending, A Global Perspective, Celent, October 22,

14 Technology Integration: Real Business Impact Winning Advantage Seeking Profitability through Technology Integration

15 Technology Integration Real Business Impact Advisory Firms with Full Integration Double their Time Spent on Client Acquisition & Prospecting 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 43% 42% 9% 10% 50 Percent or Less Integrated Client Acquistion & Prospecting 51 to 99 Percent Integrated 20% 32% Full Integration Operations Processes Source: RIA Technology Integration: The True Opportunity Cost of Inefficiency, Aite, July

16 Technology Integration The Benefits to Clients & Prospects Technological sophistication = better management of client needs 1/3 of young affluent or high-income investors shifted investments when they found a provider with better online tools. The reality is that technology integration not only supports growth it spurs it. Source: RIA Technology Integration: The True Opportunity Cost of Inefficiency, Aite, July

17 Technology Integration The Elusive Goal Number of Vendors and Separate Systems Used By Firm 1% 10% 4% 6% 50% 29% 1 to 3 4 to 6 6 to 9 More than 9 Fully Outsourced Not Sure The majority of Advisory Firms use 4 or more Vendors Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors,

18 Technology Integration The Elusive Goal Most Challenging Aspects of Technology 1% Deciding Which Systems to Purchase 14% 21% Determining a True Return on Investment 4% Integrating the Various Systems and Software 17% Not Knowing the Longevity of the Technical Solution Understanding How to Use It 43% Understanding the Impact of New Technology on Staffing Integration is the Most Challenging Aspect Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors,

19 Technology Integration Real Business Impact 60% Advisors Level of Satisfaction with Integration 50% 49% 40% 30% 26% 20% 17% 10% 8% 0% Very Satisfied Very Satisfied Somewhat Satisfied Somewhat Unsatisfied Somewhat Unsatisfied Very Unsatisfied Somewhat Satisfied Very Unsatisfied Source: Adviser Technology: Top vendors & usage report, Investment News, n= ~1,000 Financial Advisors, July

20 Technology Integration So Where Do We Go From Here? Access all software on one platform? OR Link technology so that data and information are shared, collected and catalogued automatically without any extra effort? Source: RIA Technology Integration: The True Opportunity Cost of Inefficiency, Aite, July

21 Technology Integration Technology for Technology s Sake Technology is not the end - it s a means to an end. Increased ROI Strong business processes Improved work flows More time on client-facing exercises (preparing for a client meeting or on-boarding new clients) Integration is more important than Bells & Whistles Source: RIA Technology Integration: The True Opportunity Cost of Inefficiency, Aite, July

22 You get what you pay for... Maybe Where is the technology money being spent? 98 : 1 : 1 Technology : Business process : Training Source: ActiFi Industry Experience / Forecast and 2010 FPA / ActiFi CRM Technology Report, Study Participant

23 You get what you pay for... Maybe How should technology money be spent? 1/3 : 1/3 : 1/3 Technology : Business process : Training This is not the field of dreams. If you build it, it does not mean they will come. Once you have built the technology solution, you re only a quarter of the way there. The additional 75% is all about showing advisors why they should use it. Source: ActiFi Industry Experience / Forecast and 2010 FPA / ActiFi CRM Technology Report, Study Participant

24 The Value to the Advisor and the Client Winning Advantage Seeking Profitability through Technology Integration

25 Technology Integration Business Return Technology integration can result in a profit increase of more than 125% for RIAs with $500,000 in revenue: Complete tasks more quickly, using fewer resources Automation saves time on data entry The initial investment in technology is only 1.4% of annual revenues for firms with $500,000, however: Does not include monthly fees Does not consider future fees for updates to the system Source: ROI for RIAs: The bottom-line impact of enterprise content management for independent registered investment advisors, Laserfiche,

26 Technology Integration The Client s Perspective Single Most Important Benefit of Technological Integration, from the Client s Perspective 3% 5% 9% 41% Better Reporting Fewer Mistakes 17% Better Website Experience Mobile Access 25% Quicker Transaction Process Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors,

27 Technology Integration The True Value of Technology Adoption is Key. 41% of advisors said they based a recent purchasing decision at least partly - on the potential for integration. 53% say that their biggest obstacle to integrating systems is that they are unable to identify an appropriate solution. Source: Adviser Technology: Top vendors & usage report, Investment News, n= ~1,000 Financial Advisors, July

28 Current Advisor Options Winning Advantage Seeking Profitability through Technology Integration

29 OPTION 1 Advisory Firm Selects Custodian and Technologies Pros: Advisor can select best of the best technology Cons: Advisor is responsible for selection, vendor management, integration, implementation and change management Time intensive Requires daily downloads and reconciliations Requires working with small entrepreneurial businesses Expensive

30 OPTION 2 Advisory Firm Selects Custodian who Provides Platform of Pre-Selected Technologies Pros: Custodian Firm takes responsibility of technologies Cons: Less flexibility Still have downloads and reconciliations which can lead to issues Requires working with small entrepreneurial businesses Tied to custodian for technology package

31 OPTION 3 Advisory Firm Hires Overlay Platform and Selects Custodian Pros: Flexible Outsource back office functions to save time Cons: Expensive Integration Issues Dealing with Overlay Platform and Custodian(s) separately Requires working with small entrepreneurial businesses

32 OPTION 4 Advisor Selects One Platform Including Custody Pros: Outsource Back office to save time Streamlined One source accountability Inexpensive Downloads and Reconciliations not required Cons: Less flexible Tied to custodian for technology package

33 The Financial Advisor Playbook Winning Advantage Seeking Profitability through Technology Integration

34 STEP 1 Technology Integration The Playbook Take a Fresh Look at Processes: Determine what is most valuable to your business and organize with your top priorities Identify holes in their current structures Re-examine your business processes (proposal generation, client service) A recent SEI survey found that 30% of advisors said that CRM tools were the single most important aspect of a technology solution. Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors, 2012

35 STEP 2 Technology Integration The Playbook Grade Your Existing Technology: Identify and eliminate underutilized technology that is not directly benefiting clients or helping meet business needs. Decide whether they need a bolt-on technology or a new platform altogether. Keep an Open Mind Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors, 2012

36 STEP 3 Technology Integration The Playbook Empower Your People: Involve your people in the process: Technology needs Shortcomings Vendor recommendations Training should be a main consideration of any purchase: 44% of advisors report that they received no training with their purchase in the last year. Input + Training = Empowerment Source: SEI Survey on Technology Integration, n= ~250 Financial Advisors, 2012

37 Future of Integration Key Insights Advisory market has become more complex and competitive. Advisors are in the technology business as much as the advisory business. Advisors are embracing and making investments in technology. Purchasing technology is not enough. Technology integration is a critical component of a firm s long-term success. Integrated systems can not solve all problems. Achieving integration is difficult for advisors because many lack technology knowledge and necessary budget. There are very few integrated technology solutions on the market today. Advisors are optimistic about future integration efforts at their firm. 39

38 The SEI Solution Winning Advantage Seeking Profitability through Technology Integration

39 A True Integrated Solution SEI s Wealth Platform Financial Planning CRM Advanced Reporting Advanced Portfolio Management Custody Aggregation Rebalancing Document Management Reporting Advanced Tax Management STREAMLINED OPERATIONS 42

40 The SEI Wealth Platform Full Turnkey Traditional TAMP SEI s Investment Platform, Accommodated non-sei Single System Architecture SEI s Investments Less Expensive Scalable, Automated, Simple The Wealth Platform Full Custody Platform with a Middle Office Single System Architecture Integrated, UMA, UMH SEI Models, SMA, Alts, ETF s and Custom Models Least Expensive Scalable, Automated, Simple Open Custody Platform Do-It-Yourself Full Custody Platform Advisor-purchased sub-system technology Investment Supermarket Expensive Manual, Complex, Less Scalable PACKAGED SOLUTION FLEXIBILITY UNPACKAGED SOLUTION

41 Raef Lee Managing Director SEI Advisor Network Thank You. Questions?

42 Disclosures Information provided by SEI Advisor Network, a strategic business unit of SEI Investments Company (SEI). FOR FINANCIAL INTERMEDIARY USE ONLY. NOT FOR PUBLIC DISTRIBUTION.