Developing technology with advisors at heart – Financial Planning

DALLAS They are young and committed to the technology they've spent years and their own money developing. But unlike some other fintech entrepreneurs, they have no ambition to upend wealth management.

Assembled at the annual conference for the XY Planning Network, some of the finalists vying for top prize in its fintech competition are in fact RIAs themselves.

Mark Friedenthal is both president of an eponymously-named RIA firm in New Jersey and CEO of Tolerisk, a startup he launched to develop better risk assessment software for advisors.

Jantz Hoffman runs his Washington-state based RIA, a non-profit and a startup called CSLA Tech, developing a tool for advisors to better help clients struggling with student debt.

They balance the multiple roles, driven by common beliefs that advisors need better technology to stay competitive and that they can help them better than anyone else.

"The top of the class understands they need to embrace technology," Friedenthal says. "It's very difficult to provide competitive advice without technology. But it is easier and becoming more intuitive to use for advisors and clients."

Hoffman agrees, adding that advisors will need new tech tools to address the needs of the next generation of wealth management clients. "We want to teach others what I've learned," he says. "We want to be able to provide them with a tool to do the work."

Friedenthal, who says one of the key innovations in his software is its ability to perform two levels of risk tolerance, sees all advisors working for the best interests of clients.

"We've made a big bet that the future of advice and planning is entrenched in the fiduciary standard and culture," he says. "If you believe that's the future, everybody is going to need technology to do that."

Motivating Hoffman is his idea that RIAs are best situated to help young investors burdened by large amounts of student debt, a client that the industry has traditionally shunned, he says.

"It's short-sighted, as everyone now has student loans," he says. "The old guard doesn't see the big picture. The assets will come. I have nurses, teachers, doctors, lawyers, all have tons of debt. But if I can help them minimize that, I'll have built those relationships, and that will help me build assets."

LABOR OF LOVEThe effort to bring better behavioral science to advisors is partly a personal mission for Sarah Stanley Fallaw, whose platform DataPoints is based on the work done by her father, Thomas J. Stanley, which he used to write his best-selling book The Millionaire Next Door.

"It's a labor of love, it is something he would've been proud of," Fallaw says. "He would want to get this in the hands of people to improve the way they live their lives."

Fallaw sees advisors opening up to the potential of behavioral finance tools and data as they look for ways to provide more insightful advice.

"They are slowly changing to where they value science," she says. "You can pinpoint behaviors that an advisor can use to help coach clients. Talking about spending is not as exciting as investment returns, but it gets at the heart of how well an individual is managing their life."

Advisors can better manage their practices too, says Elsa Chan, senior vice president of business development at Vestwell, a digital retirement platform.

Coming to wealth management, Chan realized how much advisors have to take on and why they need better tools.

"They are all entrepreneurs themselves, all working for commissions," Chan says. "I was amazed at the amount of work that they have to do just to set up and build the business. Helping them grow their business is very rewarding."

She hopes that the advisor tech industry can adopt the collaborative tone she found among her competitors, particularly around integration.

"There are different options out there for advisors, but a lot of tools are siloed," she says. "Advisors do not want a login for every tool; they want a single dashboard to their clients and to be able to efficiently manage those assets through one platform."

Suleman Din is managing editor of SourceMedia's Investment Advisor Group. Follow him on Twitter at @sulemandn

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Developing technology with advisors at heart - Financial Planning

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