Julia Carreon and Aaron Klein speak at the INVEST conference

When Julia Carreon, Citibank Global Wealth Management’s Head of Technology and Infrastructure, joined the firm last year, she encountered issues often encountered by clients. It took him six months to carry over his accounts from his previous job using paper checks that kept getting lost in the mail.

“Eleven years ago I said we had about 20 years to agree,” Carreon said last week during a panel at the Financial planning INVEST Conference. “We’re halfway there, and I’m telling you right now, asset management firms are sitting on friction everywhere.”

Carreon painted a bleak picture of where wealth managers and support businesses are falling short in the digital age with the potential to catch up – but only if the industry faces these challenges with a understanding of younger generations and an open mind to certain unknown notions. His session and another subsequently led by Riskalyze CEO Aaron Klein focused on the importance of correcting some misconceptions about using wealth management technology now and in the future.

For example, Carreon told the story of an elderly billionaire with terminal cancer who was driven to tears by remote scheduling tools.

“Because we had made it so anyone in the family could register for this reunion and attend it in a number of different places – remember this was 11 years ago – he said: ‘C It’s the first time my family could have a portfolio looking at everything at the same time,” Carreon said.

“He made his fortune developing an espresso machine which was sold to Nespresso and his money – the billion dollars he now had – was based on his legacy, and his legacy was his life, and he wanted to share it with his family,” she continued. “I’m telling this story because we’re here to allow people to have experiences with their money. It’s important to them because it’s who they are and it’s an expression of who they are, and I am so passionate about the fact that we as an industry haven’t made it so easy to do business with us.

Generational statistics show the enormous stakes in solving this problem. More than 3 million baby boomers retired in 2020, bringing the total number of retired Americans in this generation to 28.6 million, according at the Pew Research Center. That same year, Millennials, Gen Zs, and younger Americans outnumbered Baby Boomers, Gen Xers, and seniors across the country, making these younger cohorts a plurality of the country’s population. at 50.7%, according to the Brookings Institute. reports.

This kind of numbers can mislead some hypotheses on the extent to which technological tools will replace human financial advisors. Just five to seven years ago, popular opinion held that robo-advisors would prove more appealing to younger clients looking for lower prices and less interested in spending time in meetings, Klein pointed out. His software company provides risk analysis services to advisors and wealth managers who feared that bots would undermine the industry’s traditional business and its 1% fee.

“Advisors would come up to me and say, ‘I’m just trying to figure out how to survive in a 25 basis point world.’ Do you remember hearing anyone talk about it? said Klein. “Financial advisors don’t really know where their own value comes from. They are largely blinded by their weaknesses and threats. They see no way to neutralize them and they underestimate the power of their own forces. And, all of a sudden, it became clear to me that we were already on the winning side.

Riskalyze CEO Aaron Klein spoke at last week’s Financial Planning INVEST conference in New York.

Tobias Salinger

Wealth managers and advisors have done anything but succumb to the potential competitive onslaught of robo startups. To illustrate the point, Klein compared Google search charts for “robot advisor” and “financial advisor” in 2020. Searches for an advisor soared that year, while queries for a management tool automated assets fell significantly after steady increases in the years leading up to it. to the pandemic. Any adviser comparing their business to a video library franchise is missing the big picture, Klein explained.

“You’re not Blockbuster,” Klein said. “You’re a bit more like a brain surgeon. I’ve never had to have anyone operate on my skull, but if I ever do, I’ll go find the smartest, most efficient human being on the planet who is well trained in brain surgery to do this operation. Now I want them to be assisted by technology. I want them to have the latest and greatest tools. I want them to be incredibly efficient in their work assisted by technology. But when something inevitably goes wrong, I want a very skilled human to help us succeed with this approach.

Integrating human guidance with the latest technology, however, can be challenging. Carreon raised his 11-year-old son, Josh, and the sensory instinct type called “haptic memory”, which is a kind of memory resulting from touching certain objects and feelings such as pain, itching and other sensations. In about a decade, Carreon’s son will join the workforce.

“He won’t be happy with the tools he has to use when he goes to work if we don’t accelerate technology and innovation in our business,” she said. “I don’t think designers and technologists in our industry pay enough attention to haptic memory. It forms when we are small, and it stays with us until we die. This is one of the reasons that generational disruption and digital disruption are taking longer than expected, because it’s with us. »

That means wealth management incumbents could indeed lose their positions over time, if they don’t abandon outdated practices and master digital tools, Carreon said.

“Gen Z is the first generation of human beings to have primary smartphone haptic memory,” she said. “They grew up using their mum’s phone at age 3 to play Angry Birds, and it has shaped and shaped who they are, and it will continue to shape and shape who they are. And I believe that it’s going to accelerate the disruption, it’s one of those things where the change is very, very slow when it happens and then it happens overnight.