Category Archives: Digital

Around the RIA Web with Adhesion, May 2016

A few great reads from the month of May, highlighting some of the key conversations we’re having with advisors. Growth, technology, investment design, outsourcing, recruiting, compliance…all are key discussion points for RIA firms and we share the following for your own discussions:

How does an RIA differentiate in a world full of “advisors”. By casting a tighter net, NOT a wider one. A must read from Michael Kitces on connecting with one prospect vs. trying to appeal to all of them.

We all want to embrace technology in the name of “efficiency”. Smart adopters take the time to think through the larger opportunity of better allocation of resources, and the right path to getting there. HarvardBiz with a great article on the flexibility, new learning opportunities, and advancement prospects that are possible with the right human/tech combo.

Banking on expected returns carries its own risks, but the danger gets magnified when future liabilities force inappropriate investment choices. The Thought Factory eloquently explains this risk, and Ben Carlson further clarifies what can happen when aggressive assumptions take the place of hard choices.

Adding to the risks highlighted above, how can future return assumptions remain so high after an unprecedented period of fixed income returns? Wes Gray shows the historically high returns in the recent past, while Brian Portnoy highlights the risks of plugging into cheap fixed income ETFs after a multi-decade bull market.

Speaking of risk, what is it? Risk can explained in a number of ways, depending on which pundit or academic is speaking. David Merkel shares a few ideas about properly defining risk, relevant to most clients of advisors.

Josh Brown makes a compelling case for rejecting clients who want it their way. In other words, suggestions are not as valuable as advice, and neither party benefits from this type of “customized” solution. Might be a good way to get out in front of the too many clients problem.

Formal schooling is just the ante for a career in financial services. Real client-facing experience is a must in learning to deal with demanding and anxious customers on a frequent basis, as shared by Lawrence Hamtil.

Factor funds are all the rage but are not created equal. As shown by Jack Vogel, the number of holdings, weight of those holdings, and reconstitution of those holdings varies and can lead to dramatically different outcomes.

It’s always good to hear how industry peers think about running their business. A few observations in Financial Planning on enhancing the human aspects of fee-based, fiduciary advice.

Adhesion continues to work behind the scenes in helping advisors grow, with new options allowing the integration of Outsourced CIO implementation via Mercer and robo technology via Riskalyze. We welcome your feedback at, and encourage you to subscribe on the upper right of this page to receive our regular blog updates.

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Around the RIA Web with Adhesion, April 2016

A few great reads from the month of April, highlighting some of the key conversations we’re having with advisors. Growth, technology, investment design, outsourcing, recruiting, compliance…all are key discussion points for RIA firms and we share the following for your own discussions:

Tim Harford on the compromise effect and the paradox of choice, relevant for how advisors choose investments and their clients choose an advisor.

Michael Kitces uses the context of diet and exercise to show how advisors can use small financial planning goals to help clients on a successful long-term journey. More excellence from Michael on the evolving skill set of the modern advisor.

Ben Carlson on building failure into your process, so important in developing robust investment plans. This pairs well with his post on the dual mandate of an investment advisor, that the best plan for a client is one that survives the real world.

Tom Brakke states well the obvious flaw in starting manager research with a performance screen, and Corey Hoffstein shares the additional problems with using 3 years as a lookback period. The team at GestaltU covers the perils of past performance quite well in this excerpt from its new book.

A great advisor views his/her role as one of deep relationships, personal advice, and ongoing coaching through the journey. Awesomeness from Josh Brown on The Job Security of a Great Advisor.

Our advisor clients tend to embrace the flexibility of an open-architecture platform, again demonstrated in our approach to “robo”.  Some providers have chosen a more bundled approach to advisor solutions, later requiring a messy divorce in trying to replace any specific component.

Are you marketing to a niche market, or truly serving one? Julie Littlechild neatly explains the difference.

When it comes to data, more is not always better. As Tadas Viskanta explains, comparing different eras is hard and in investing can be downright dangerous.

Josh Brown on how bad active management is being taking to task. Jake at EconomPic shows when good active management can be worth the cost. Patrick O’Shaughnessy rounds out this topic with a wonderful illustration of the difference between seeking alpha and seeking assets.

Speaking of expensive active management, ThinkAdvisor reports that the SEC is prepping a 2016 initiative on 12b-1 fees, a hidden cost of mutual funds that gets disclosed but rarely discussed.

One trend sure to continue with the new regulations is mergers and acquisitions of RIA firms. Investment News summarizes this trend, and shares good ideas on items to consider in any potential arrangements.

Speaking of new regulations, some solid advice from Russell Investments on creating, documenting, and reviewing best practices for healthy client relationships.

The consummate guide to the DOL ruling from Michael Kitces, incredibly thoughtful and no stone unturned.

JP Morgan puts out a wonderful Guide to the Markets every spring, with all kinds of fun and informative graphics.

Adhesion continues to work behind the scenes in helping advisors grow, with new options allowing the integration of Outsourced CIO implementation via Mercer and robo technology via Riskalyze. We welcome your feedback at, and encourage you to subscribe on the upper right of this page to receive our regular blog updates.

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Crafting Solutions at TDA National LINC

Growth was a big topic at the recent TDA National LINC conference, and Adhesion was central to the discussion on many fronts. First, our recent entrance into the TD Ameritrade Unified Managed Account Exchange (UMAX) generated much discussion about the value of leveraging a specialist to implement a firm’s investment approach. While some firms use Adhesion as a delivery vehicle for internally built strategies, others see additional value in outsourcing the design of the firm’s asset allocation blueprint.

Significant buzz also came from the announcement that Adhesion is partnering with Riskalyze and TDA to deliver the industry’s first open-architecture digital advice platform built solely for advisors. While much of the “robo” discussion has centered on adding an outside vendor with limited choice, the Adhesion/Riskalyze combo is designed to blend in seamlessly with an advisor’s existing practice. It is a true business solution, helping advisors meet the needs of web savvy prospects and preparing the firm to serve the next generation members of existing client families.

While there was significant focus on growth and robos, there was also time to sample some truly unique craft bourbon. The Adhesion booth was quite popular the first two evenings with tasters – ranging from bourbon novices through the very experienced. All enjoyed the selection offered.

Bourbon Tasting_Bartenders  Busy @TDA (002)

For a more complete roundup of LINC – inspired reactions, here are a few stories published since the conference:

RIABiz on the threats and opportunities for advisors

Investment News on TD Ameritrade’s open-architecture approach to technology

Wealth Management on the Adhesion/Riskalyze offering

Financial Advisor IQ on integrating a solution for small accounts


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The Brave New World of Virtual Advice

In a world gone digital, the traditional financial advisory approach of working with clients in-person from physical branch offices is evolving. At the Pershing INSITE conference last week, Pershing introduced several digital initiatives to help advisors extend their marketing reach. These include new digital platforms designed to work with the new Apple Watch, Big Data analytics and even crypto-currencies like Bitcoin. And of course, their own white label robo advisor offering as well.

The game is expanding from simple robo-advisors to a fundamental change in the way advice is delivered. Bill Harris, CEO of Personal Capital, also took the stage at INSITE to discuss how digital technology is revolutionizing the industry. Said Harris, “We provide virtual advice, not robo advice.”

According to a recent McKinsey report (The Virtual Financial Advisor: Delivering Personalized Advice in the Digital Age), leading wealth managers from around the world are experimenting with a new approach that combines personalized financial advice with digital technology: The “Virtual Advisor.” The Virtual Advisor concept replaces networks of branch offices with a central hub from which advisors engage their clients via telephone, video conferences and digital tools. This model is particularly attractive to the “mass affluent” segment—consumers with assets between $100,000 and $1 million who have proven to be difficult to serve cost-effectively.

McKinsey’s research estimates that 42 million households, representing $66 billion in annual revenues, are prime candidates for virtual advice. This is a statistic that should make any advisor sit up and take notice.

The research suggests that as clients in these segments become more comfortable with the virtual advice approach, they will form a “profitable core of customers for those financial services providers that can deliver high-quality advice digitally.”

Consumer behavior is already beginning to shift towards the digital. McKinsey found that in the United States, 40-45% of affluent customers who switched their primary wealth management firm in the past 24 months moved to a direct, digitally-led firm.

Advisors who lead the way by upgrading their digital approach will likely see sizable growth from these client segments. McKinsey also found that a virtual model can deliver sizable cost reductions, increased customer satisfaction scores and stronger compliance and control.

Advisors looking to increase their virtual presence already have a built-in advantage. Many mass affluent and high-net-worth clients are already comfortable handling their finances from a distance. McKinsey estimates that at least 20-30% of these clients are likely to subscribe to the virtual model. According to the report, the virtual financial advisor model is being deployed successfully. Why? McKinsey identifies four trends in the financial advisory industry that are helping to propel the virtual financial advisor model:

  • A critical mass of consumers is now open to receiving financial advice from someone who does not live or work near them
  • The number of clients is growing at a faster rate than distributed advice networks can sustain
  • Digital technologies and capabilities are moving mainstream
  • Regulators in many markets have turned their focus to the quality of financial advice, and the fees charged to retail consumers

There is a lot of growth and revenue at stake for advisors who have not upgraded their technology platform and digital capabilities. For those advisors wishing to target the mass affluent and remain competitive in the high-net-worth space, keeping pace with current technology is no longer optional. Adhesion is continuously evolving its offering to support advisors’ ability to offer virtual advice, and we do it within a personalized UMA environment that accentuates advisor value propositions. We offer advisors enhancements like online onboarding, customizable client portals and easy access to investment strategists and asset managers.

Check out our About Adhesion video to learn more about what we can do for you.

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Schwab Entering Into Digital Advising May Not Be All Bad News for RIAs

As Schwab announced plans to enter the online advisory market, an article in Financial Planning discusses some of the implications this may have for RIAs and online startups.  CEO Walt Bettinger told analysts in July that Schwab was “fast at work on what we believe will be a groundbreaking and market-impacting introduction of an online advisory solution.”  On the one hand, this move could mean increased competition for traditional advisors.  According to Grant Easterbrook of Corporate Insight’s Consulting Services, Schwab’s entry could threaten advisors by “putting even more downward pressure on fees.”  Advisors who are trying to reach out to younger clients may be particularly vulnerable since Schwab already utilizes online accounts and phone-only interactions.  Says Sophie Schmitt of Aite Group, “They need to appeal to a younger generation in a more effective way, and will probably compete on lower cost and lower minimums.”  However, Easterbrook points out that: “It’s important to remember that other big financial firms, most notably Bloomberg and LPL, have also tried to enter the digital-only market without success.”

What’s really intriguing is the idea of traditional advisors partnering with their online competitors.  Financial Planning cites a Fidelity Institutional survey conducted earlier in the year where nearly a third of RIAs and broker-dealer executives polled said they planned on looking for ways to partner with a digital company.  An Aite Group research paper by Schmitt found that online investment managers seemed a good fit for financial planners, while tech firms made more sense partnering with money managers.  The paper also stated that larger wealth managers should consider buying online firms, rather than just partnering with them.

While Schwab’s announcement may raise some concern for RIAs, there is certainly no reason to panic.  Chris Nicholson of San Francisco-based startup FutureAdvisor argues that a big company like Schwab is simply not designed to innovate or execute quickly.  Says Nicholson:

“They have brand recognition, can spend tons on advertising and probably could undersell us.  But they also have huge inefficiencies, and their only disadvantage is themselves.”

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