Over the years the T3 conference—now in its 19th year—created and still run by advisor tech expert Joel Bruckenstein, has become something of a homecoming and reunion for me—in addition to meeting new tech entrepreneurs and advisors.
It really is as much a community meeting as it is a conference. As a journalist, I’m lucky not to have to navigate the business side and its hiccups like the constant increases in prices and costs that vendors and exhibitors experience and complain about, a perennial shortage of advisors and the occasional running out of food at lunch or the coffee that is always taken away too soon.
Most all of it is good-naturedly accepted because the real value comes in seeing both old friends (and in my case sources) and technology companies (both incumbent and new), and the generally strong programming that Bruckenstein brings together.
While discussions of last week’s bank failures and ongoing market volatility certainly dominated thoughts and conversations to an extent, focus always returned to the sessions at hand, and with that I’ll discuss some of what I thought were the highlights.
“AI is stupid,” was my favorite quip of the event and came out of the mouth of Dynasty CTO Frank Coates. He did not mean it literally; like many things Coates says, I think it was meant to capture attention and wake and stir everyone up. The sentiment in its non-literal form is one I agree with and one that Coates went on to elaborate: advisors, in particular, and advisor tech folks (especially the marketeers) as well love the idea of threats to advisors.
We have lived through similar cycles with robo advisors, migration to cloud-based and cloud-native technologies, and cyber-security breaches and fears (more on this later).
I firmly believe that—just as the fear from robo advisors before it, which drove a massive amount of innovation in the advisor tech sector—artificial intelligence, inclusive of machine learning, natural language processing and generative AI (for example ChatGPT and its already dozen or more competitors) will be transformational, at times disruptive, but ultimately a force multiplier and additive to the work of financial advisors.
Coates noted later that a big challenge, and one even AI builders acknowledge, becomes “how do I footnote?”
“When you think about conversational AI, how do I verify it?” said Coates, adding “there is not an easy way today to say what is the source and is it valid.”
Another speaker on the panel reassured advisors in the audience in a way reminiscent of the dawn of robo advisors.
Spenser Segal, founder and CEO of the technology consultancy and provider ActiFi, Inc., said much of the debate over AI and the advisor industry boils down to “judgement and wisdom.”
“Separating what can be automated and easily applied to the technology you use but AI cannot read your client,” he said.
These technologies will, and already are, helping advisors and their firms build in efficiencies and automate processes in ways never before seen.
A first-day session helped illustrate this: “HIFON Talks Tech AI Comes to the RIA.” It was led by Shaun Kapusinski, founder of the HIFON technology network, with panelists Trevor Chuna, the CTO of Sequoia Financial Group, and Vib Arya, COO of Shufro Rose, and brought in an audience that filled the room.
I was taken aback to have Chuna bring up how Sequoia had discovered AI-based chatbot provider Cognicor from a piece its founder, Sindhu Joseph, had written for WealthManagement.com.
Chuna went on to describe his and Sequoia’s approach to deciding how to leverage AI: “Start with what is the most painful part of my world today,” he said.
Simply put, taking the most mind-numbing, onerous, previously manual processes and workflows that advisors and staff had to perform and have the AI perform them, and perform them in exacting, repeatable fashion, thereby raising efficiency, eliminating NIGOs by taking the humans out of the mix. This allows what has been discussed and not realized for the last decade: enabling advisors to spend more time with their clients or focused on ways to maximize other aspects of the relationship like helping them achieve their goals.
FP Alpha Estate Planning and P&C modules
It is along the same lines I can transition to discussing what looks to be a rollout with significant business development or expansion potential for most RIAs. FP Alpha, which won a 2022 technology innovation award at WealthManagement.com‘s annual Wealthies, made a three-part announcement at the show, which included the unbundling of its Estate Planning Module from the rest of its platform.
This allows advisors who might already have tax and financial planning applications they like to reduce their spend on duplicative or redundant software and still reap the benefits of FP Alpha’s estate technology.
Within that technology is the release of Estate Lab 2.0 and its many enhancements, among them that the application can now automatically transfer key data points from wills and trusts directly into Estate Planning Lab.
With it, advisors can more easily compare alternative estate planning scenarios to the current one—which can be years out of date—by pulling in assets to illustrate how those funds would transfer at death today—yes, an uncomfortable but necessary conversation—and at death of the other spouse (if there is one).
In a session at the conference, Wood Boone, a wealth planning associate at Baird, discussed the advantages of the platform.
“We have six or seven estate plan specialists [at Baird] but we have 1,400 advisors and the sheer capacity—it is tough to get to everyone,” he said.
“A complex estate plan could take four or five hours to create a chart we could share with an advisor,” said Boone.
The homegrown machine learning and natural language processing technology and algorithms built into FP Alpha’s software can read and extract the data from even a 100-page estate plan and build such a chart within minutes.
In other words, it can provide advisors the ability to remain far more involved in a process, even if just reviewing the key financial aspects of an estate plan that many advisors in the past would hand off entirely to someone else.
In the 2023 T3/Inside Information Advisor Software Survey, only just under 16% of advisors are using estate planning tools, which is up from 2022 when just under 11% used the software.
And, as noted during the session, younger clients are asking about estate plans and are looking toward the future and expect their advisor, if they have one, to be the “financial quarterback” of the process.
The third part of the announcement is Introduction of FP Alpha’s new P&C Snapshot, a tool that uploads home and auto insurance documents that can prove a big timesaver for advisors that can help in finding red flags and improve clients’ current situation.
“I’d argue with Joel and Bob [Veres] that one category is missing [from their annual technology survey] and that is insurance,” said Andrew Altfest (see my colleague, Ali Hibb’s recent RIA Edge 100 profile of Altfest Personal Wealth Management).
“Some 70% of clients want their advisors to help them with insurance and only something like 3% of advisors are currently doing so.”
I have to give Joel credit, he bangs the drum on advisor digital security at every conference, something I’ve long applauded. A fellow technology journalist made light of his approach, which some could construe as fear-mongering, on Twitter. I would agree if it were not that advisors, as a body, remain so woefully unprepared.
FCI founder and CEO Brian Edelman gave a simple straightforward presentation on 13 questions advisors will be asked by regulators beginning with, “Do you know for sure that your firm has an active cyber program?” and ending with “Does your cybersecurity team have a dashboard to see all devices and events?” It provided a fine wakeup call for unprepared firms and a good review for those few that are.
Edelman pointed out that even smaller RIA shops have as many as 25 relationships with outside technology providers and advisors, at the very least, need to have a ready list available of contacts in case of a breach.
Another cybersecurity speaker, Mark P. Hurley, the CEO of Digital Privacy & Protection, touched on how advisors will be expected to play a “key role” in managing cyber risks for their clients in the future as well. I plan to cover this in more depth in a future column.
I first met Martin Tarlie, the product lead of Nebo by GMO, at our own WealthStack conference in 2022. He has spent the last 10 years at work on the ideas behind the platform, which he says can be thought of “as a startup within a mature asset management firm.”
If I’m being honest, I am still digesting this presentation that Tarlie said was new but was thought-provoking and quite obviously kept the attention of those in the audience.
Tarlie presents the case that building portfolios today is both a people problem and a shortcomings-of-modern-portfolio-theory problem.
“Nebo sits at the center of a multi-dimensional goals-based process … [acting as] … the “engine” connecting the plan to the portfolio,” testing risk while building a portfolio.
If for no other reason, advisors still building their own portfolios or those interested in following the latest philosophical and methodological underpinnings, which are bringing behavioral finance into the process, should check out the resources Tarlie has created.
AdvizorPro & PlanPro
I got to meet several newish technology providers at the conference as well. The most interesting was Michael Magnan and Hesom Parhizkar, co-founders of AdvizorPro and PlanPro.
Of most interest to financial advisors will be PlanPro, which provides data, tools and plethora of filters to help effectively engage plan sponsors. The dozens of filters, including red flags, plan details, geography and others can help advisors find plans in their area and view in-depth plan profiles. The data they collect can be used to find plans with high fees and the potential for savings, as well as weaknesses in plan funds or diversification issues among others.
Magnan, with more than six years of experience in the financial services industry as a data scientist and product manager before building his own startup, said it was personal experience that led him to start PlanPro.
While the application starts with Form 5500 data, it has investment data on plans with more than 100 employees and lets plan advisors get at plans in the sweet spot of having at least $10 million in assets.
“We provide all kinds of ways and filters for you to search to find companies that need your help,” Magnan said, easily drilling into plans that had unnecessarily high fees during a demo of the product.
“Two things we really specialize in are reports with rich data on plans and performance and our lead lists,” he added.
More to Say
There is a lot more I came away with from T3 this year that I will be unpacking in future columns and stories.