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It’s All About the Experience Stack

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Many advisory firms are looking to attract and retain clients as they contend with forces that are impacting revenue growth like margin compression, an aging workforce, and digital-native investors.

Re-evaluating Tech Investments

For the past several years, firms have invested in technology—the tech stack—to make their businesses more scalable. Unfortunately, many of these investments have failed to deliver the expected ROI. Nor have these investments improved the things that customers really care about.

When we talk with firms about their tech stacks, it feels like they’re buying a lot of technology and throwing it at the problem, hoping it will provide a solution. I picture a house of cards—all of these integrated pieces of tech that are ready to collapse when someone bumps the table. And firms are throwing a lot of money to create these wobbly, integrated solutions. I often cite research conducted by InvestmentNews in 20171 that shows how, for the preceding five-year period, investments in wealth management technology outpaced revenue growth.

Increasing Client Satisfaction and Growth

What we don’t hear enough about is the “Experience Stack,” the application of technology to simplify and enrich both the client and advisor experiences. By focusing on the Experience Stack, firms can increase client satisfaction and drive growth.

An Experience Stack doesn’t require more technology, it just requires the right technology. In fact, by being more selective with their tech investments, firms can “shrink to grow.” By right-sizing their infrastructure investments with revenue, firms can improve their operating margins and focus on tech that improves the client and advisor experiences.

Driving Revenue With Collaborative Financial Planning

An Experience Stack built on a world-class, cloud-based financial planning solution drives revenue by focusing on the clients’ goals. It promotes transparency and creates a collaborative client-advisor relationship. Advisors can help clients manage their cash flows and show how today’s decisions will impact their goals and lifestyles.

To improve customer service, the Experience Stack streamlines advisor workflows. It securely transfers data between the financial planning platform and the CRM, and/or the firm’s books and records applications. This data can include advisor, client, and client/household information. Automated data transfer creates a “single version of the truth” as all client details are reconciled across the applications in the Experience Stack.

Firms that offer Web-based portals can enhance the client experience by augmenting the portals with API-based software components. By embedding components for account aggregation, net worth, probability of achieving goals, and accounts associated with funding goals among others, firms can elevate their clients’ experience. When evaluating platforms, ask your vendor about their API strategy and how they can deliver collections of APIs to create your desired experience.

Embracing Change and Challenging Conventions

The Experience Stack includes more than just technology—it’s about the practice as well. In response to the evolving market, advisors are adopting different business and pricing models and acting more as life coaches for their clients.

Our recent study with Fidelity found that advisors who are forward thinking, embrace change, and challenge conventions are more successful than their peers. These are FlexGen Advisors℠. They’re focused on planning and the client experience. They’re tech savvy and interested in serving a diverse range of clients. Most notably, they have higher AUMs than their peers.

FlexGen Advisors are also adopting different pricing models because the data is pretty conclusive—the subscription economy is REAL.2 Software as a Service (SaaS) is providing meaningful services that are priced in a way that is relevant for consumers. Fee-based revenue does not have to rely on basis points.

Delivering Experiences That Clients and Advisors Want

While technology powers the Experience Stack, it is more than just technology. Using features like automated workflows, advisors can focus on serving clients the interactive, collaborative experiences they want. And firms can drive sustainable revenue by selecting the right tech to create an Experience Stack that secures advisor and client loyalty.


1 InvestmentNews/Moss Adams Benchmarking Studies, 2012–2016

Note: This figure was referenced in the Investment News/Moss Adams 2017 Adviser Technology Study: Driving Efficiency, Profitability & Growth

Figure 3: Technology costs have outpaced revenue growth Between 2011 and 2015, technology accounted for the fastest-growing expense at advisory firms, increasing at a compound annual rate of 16.6%. That outpaced revenue growth, which grew at a 13.5% rate, as well as employee benefits costs (which grew at 14.4% CAGR) and employee compensation (14.1%).

2 Exhibit 2 – Enterprise IT Product Market Split By Cloud-based Offerings (PaaS, IaaS, SaaS) and Non Cloud-Based Products, 2016 Revenues and 2017-2021 Forecast.

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