Male Speaker:

Louis XI, the great Spider King of France, had a weakness for astrology. He kept a court astrologer whom he admired until one day the man predicted that a lady of the court would die within eight days. When the prophecy came true, Louis was terrified thinking that either the man had murdered the woman to prove his accuracy, or that he was so versed in his science that his powers threatened Louis himself. In either case, the man had to be killed. One evening, Louis summoned the astrologer to his room. Before the man arrived, the king told his servants that when he gave the signal, they were to pick the astrologer up, carry him to the window, and hurl him to the ground.

The astrologer soon arrived, but before giving the signal, Louis decided to ask him one last question. You claim to understand astrology and to know the fate of others. So, tell me what your fate will be and how long you have to live. The astrologer replied, I shall die just three days before you, Your Majesty. The king’s signal was never given. The man’s life was spared. The Spider King not only protected his astrologer for as long as he was alive, but he lavished him with gifts and had him tended by the finest court doctors. The astrologer survived Louis by several years, disproving his power of prophecy, but proving his mastery of power.

Announcer:

Kelly Coughlin, is CEO of BankBosun, a management consulting firm helping banks C-level offices, navigate risks, and discover reward. He’s the host of the syndicated audio podcast bankbosun.com.  Kelly brings over 25 years of experience with companies like PWC, Lloyd’s Bank, and Merrill Lynch.  On the podcast Kelly interviews key executives in the banking ecosystem to provide bank C-suite offices risk management, technology, and investment ideas and solutions to help them navigate risks and discovery reward.  And now your host, Kelly Coughlin. 

Kelly Coughlin:

Greetings. This is Kelly Coughlin, CEO of Bank Bosun, helping bank C-Suite executives with risk, regulation, and revenue creation in a sea of threats and opportunities. As we all know, other than funding the bank operations, banks do two things with their customer deposits. They invest in customers in the form of loans, and they invest in financial assets like U.S. Treasuries, mortgage backs, muni bonds, bank-owned life insurance. All banks do some combination of these investments that match their cash flow needs and their future liabilities. The common denominator of all these investments, whether it be loans or financial assets, is the competition for customer deposits, and these deposits can come in the form of checking and savings accounts, time deposits, CDs, or these “deposits”, and I’m doing air quotes here, they can come in the form of private client assets, wealth management assets, and/or trust account assets.

These types of deposits are a great source of other fee income a bank can generate to operate the bank, generate profits, and pay a return to its owners. The margins are typically higher than net interest income margins, and it’s potentially a great source of revenues and profits to the bank. However, these assets are a great source of revenues and profits to many others participating in the financial services ecosystem. To paraphrase Tom Wolfe in Bonfire of the Vanities, as he’s explaining to his daughter about what a bond was, he says, we don’t get the cake. We just fight for the crumbs, and there are many, many fighting for this cake that generates the crumbs. Other banks, big banks, small banks, brokers, small and large, independent financial planners, mutual fund companies, accounting firms. In fact, there are other one million individuals that fight for the crumbs as part of their business.

I was CEO of an investment and financial technology company that helped some of these banks compete for trust and wealth management assets. And I know this implicitly. Competition is fierce, and harnessing the right tools and talents is critical to ensuring a bank can effectively compete. Having the ability to efficiently and consistently identify customer needs, risk tolerance, and financial profile, is important for all of these one million-plus advisors. But banks have multiple departments that face the client. The teller, private client rep, maybe securities broker, maybe insurance agent, wealth management, trust department, and of course the credit group. And this multi-facing setting presents interesting challenges to a bank.

Today’s guest is the director of global marketing for a company that has one of the leading technology solutions that helps advisors, including banks, collect, compile, and present data related to customer needs, risk, and financial profiles. You might not recognize the company name Advicent, but you will probably recognize one of the flagship products, NaviPlan. Today’s guest is Tony Stich. Tony has experience with Bank Mutual in Milwaukee, and a number of other banks. I’ll let him talk to you about that. He attended University of Wisconsin, and I’m very happy to have him today. And he’s probably a dreaded Green Bay Packers fan, so I’m glad we’re doing this before Super Bowl 51, because I’m fearful being a Minnesota Vikings fan, the Packers just might win the Super Bowl this year. Tony, are you there?

Tony Stich:

Kelly. Quite the introduction. Thank you so much. I am a Packer fan. I have to do full disclosure. In fact, my grandfather purchased original season tickets at Lambeau Field. He was one of the true attendees of the Ice Bowl. If you go by the stats, there was apparently about a quarter of a million attendees. My grandfather’s actually one of the real, authentic ones. We’ve had the same six tickets since they started selling season tickets, in fact. I attend myself the warmer games, and then the poor souls that like the December games, so be it.

I do want to begin by just providing a brief history of my time in banking. I think it’s very applicable to this conversation. I, in fact, started my career at a company called Guarantee Bank. They provided banking services for about a dozen states in the Midwest, but also across the country, they provided wholesale mortgage, secondary lending, you name it, again, to 49 states to which I served those needs.

I also did some time first at AIG and then back to banking. And now, most recently, I was the director of marketing at Bank Mutual, third largest bank in Wisconsin. What we consider to be a community bank. We had 70 offices at the time. So, I have a great deal of understanding and awareness of the needs of banking. And in your introduction, and you talked a lot about the challenges a bank faces. I’d like to cover that today, ideally, but also how our technology can help bankers, especially at the C-Suite level in making sure they’re saying relevant during this consumer revolution.

Kelly Coughlin:

I guess the, the thing that gets my attention first, Tony, there’s been a lot of chatter about this robo advisor technology. My question to you is, where does the line between robo advisor and financial planning meet or differ? Or are they the same? Are you guys in the robo advisor space? Would you give us your definition of that and contrast it with a financial planning software?

Tony Stich:

Absolutely. Quite a hot topic. Let’s define robo advice or robo advisor versus financial plan. Robo advisor is a technology that actually automates the entire process from obtaining the client through a website such as Betterment or WealthFront, and providing light advice based on data that is inputted from the user. A user could create a user profile, log into the system, provide a lot of data, both demographic data, but also financial data including in some cases goals, retirement age, and other objectives to meet retirement. And out from that robo advisor or technology, provides a lightweight plan. At no time is a human advisor involved with this planning process. It has to be done by the user establishing during the application process they want to be contacted by a financial advisor. What makes it even more interesting with robo advisors is oftentimes, you’re not allowed to use a human advisor unless you have particular assets under manage, let’s say $25,000 or greater. The unique difference between a robo advisor and a financial planning software is that in one situation, the advisor or financial professional’s inputting the data and then outputting the plan. In a robo advisor, it’s simply websites, where the user inputs their own data, links their accounts, and then gets financial advice through that.

elly Coughlin:

It’s kind of like they’re the Uber of financial planning. They’re trying to at least dis-intermediate the financial advisors and save the end customer anywhere from 50 basis points to 150 I suppose.

Tony Stich:

Right, and that’s actually a really great point. We talked initially about the driving down of fees or money, a profitability an advisor can make, because a robo advisor on average charges 75 basis points less than a financial advisor. But what’s interesting, Kelly, is much of our socioeconomic data that we have indicates that while millennials like the interaction with the robo advisor, they still want the expert advice of a financial advisor.

In the last couple of years, we witnessed a considerable amount of activity in that space, both enterprise companies engaging with robo advisor technology, robo advisors working directly with consumers, but also look at the venture capital, companies infusing money into robo advice. A prediction that we have for 2017 includes robo advice in how we believe it is now a race to the bottom. Robo advice is becoming a commodity. It’s driving down fees to manage assets; driving down the cost of doing business. In fairness, it is drawing a concern for bankers, wealth managers, registered investment advisors. However, we feel, have no concern. In fact, we’re seeing a lot of the opposite in terms of millennials’ expectations for retirement advice. We look at robo advisors as a lead generation tool. It’s really shedding light on what is necessary in today’s environment. That is the value of a financial plan.

When you look at robo advice, the fiduciary rule set forth by the Department of Labor, and you couple that with a consumer revolution, millennials are beginning to want, if not expect or demand, a financial plan. To stay competitive against robo advisors; to stay competitive against other institutions, what can banks do to provide that level of service?

I think that’s a great segue into kind of explaining our technology stack at Advicent to better provide your listeners with an understanding of what we can offer to the banking space. First of all, a little bit of background about Advicent. The name comes from the word, of course advice. We have been in this industry for 50 years. In fact, Gus Hansch was the founder of our company. He was what they called the godfather of financial planning. He developed the technology that we use today. One of our financial planning engines, in fact, Financial Profiles. As you mentioned before, we also have NaviPlan. Those are the two banner products underneath our flagship financial planning engines. NaviPlan, of course, is the more sophisticated, comprehensive financial planning software. Financial Profiles is more of a down-and-dirty forecaster. It provides goal-based advice. It’s designed more for helping institutions sell particular products using forecasting technology. Let’s focus, of course, on the United States. So, let’s focus on NaviPlan for today’s conversation.

Our software is the calculation engine that a wealth manager, financial advisor, or another financial professional uses to generate advice through a financial plan. This advice can include things like estate planning, tax planning, asset allocation, retirement planning. What’s very important here is, we believe firmly that an advisor must be at the core of this relationship with the client.

Kelly Coughlin:

I have some experience using NaviPlan. Would it be a fair statement to say that you guys were kind of the first generation of robo advisor, before that term was even around back in 2000, 2003?

Tony Stich:

Even back early 2003, we were talking about client portal technology, the ability to have a client access data digitally. We did talk about that at that time, but it wasn’t on our road map. Let’s tie this back to banking for a minute. We looked in the mortgage process. There were some reports that we put together that when a person walked into a bank to meet with a loan officer to apply for a loan, they have already done eight hours of research online. Yet, they still chose to walk into an institution prior to making that life changing decision. We are finding the same holds true for financial planning.

While robo advisors are attracting millennials, they’re attracting more investors than ever before. At the end of the day, millennials, Generation X, baby boomers, we all still seek out expert advice from a human. We talk at length about the fact that robo advice cannot empathize with the loss of a child. We talk about how robo advice can never empathize with the loss of a job. While a financial advisor, which is now becoming a life coach for financing can come to your house, can talk to about your options, can truly understand the dynamic you have with your spouse or with your children, which can never be replaced by robo advice or the next thing, artificial intelligence.

Kelly Coughlin:

All right. Let’s talk about how this type of technology can work with all of the different potential departments that can face the client. The teller, the private client rep, the securities broker, insurance agent, wealth management, trust, credit, all of these groups that can potentially have a relationship with the client. Is it your vision that the bank will get all of these groups to buy into the technology platform that you have and kind of force the trust people, who are a completely different animal than the securities brokers, for instance, who are completely different than the tellers?

Tony Stich:

And that is our vision, in fact. Let me talk a little bit about NaviPlan and why it’s the number one financial planning technology across the globe. And that’s because it is sophisticated, yet it’s also simple. So, it’s a repeatable process, as well, which we talk about all the time. Simple and repeatable, but also sophisticated. So, when you talked about that internal architecture, you mentioned bankers, tellers first, of course, personal bankers, maybe your investment team. Let’s just go up to your trust services. Our technology allows those advisors to help manage people’s money through the financial planning technology. The buy-in question, that’s simple. If you provide a technology that’s easy to use, that shows the benefits of a product or service, it will certainly be adopted by that whole group. One more unique characteristic about Advicent is that we are the only provider of financial planning software that has end-to-end solutions.

We offer a technology called Advisor Briefcase. Advisor Briefcase is a marketing communications tool that has over 600 pieces of FINRA reviewed content. This content is customizable to the bank or the financial advisor, and can be distributed to different groups of customers. Now, what’s beautiful about the system is that the content is relative in nature to that person’s financial place in life based on groupings of the names that the financial advisor sets for them. Secondly, that data is again all FINRA reviewed. Our marketing communications tool, everything is looked at by FINRA. No one else can say that. So, every document that you use within AB, the Advisor Briefcase, actually has a letter from FINRA saying that they’ve acknowledged receipt and review of this documentation. That is the beginning part of the process. Attracting that prospect into the bank’s product offering set. Then, you go into the leads technology or the financial planning engine, where the wealth manager or the advisor engages with the client, after being attracted, of course, by the marketing communications, and then we put together a plan.

We also offer technology, our Narrator technology, which is a stack of technology that surrounds of financial planning engines that includes a client portal; that includes API technology and that also includes a dashboard for business intelligence and metrics. I’m going to focus on the client portal for just a moment. Many community banks have a core processor, but they don’t have a lot of money to invest in PFM tools; account aggregation tools; things like that. I understand. I’ve actually been in banking. I’ve seen what they charge, core processors charge, for PFM technology. We actually offer that, too, at a much lower rate. It’s not a usage rate. It’s not a transaction rate. It’s a flat rate.

Kelly Coughlin:

Tell us what PFM is.

Tony Stich:

Personal financial management. It’s the ability for someone to manage all of their accounts in one roof. The benefit, of course, this to a bank is that you then get to see all the accounts. You get to see the whole wallet, and you get to see where you can help. Where you can reduce a car payment; where you can invest the money into an annuity; where you can do x, y, or z. This is actually called Narrator Client. It’s our client portal technology.

Kelly Coughlin:

Does Narrator have the ability to pull in “held-away” assets as well?

Tony Stich:

Yes, so that’s the account ag features. We have account aggregation technology, which allows you to see all the other banks that they’re with. You can bring all that in to this one PFM technology, this one personal financial manager. You can put your car loan in. You can put your 401K in.

Kelly Coughlin:

Of those “held-away” assets, are they static or are they market to market?

Tony Stich:

Nightly update. Every night, that’s updated. So, as we go along this client journey, we’re back in this client portal. The advisor, the wealth manager, the trust team can actually review this data with the individual. What’s unique about our client portal is that we don’t just account ag. We overlay your financial plan on top of that. So the end user can actually see their financial plan. See if they’re drifting from a goal. See if they’re on track for retirement so that can make a course correction. This is where we get into this BI, business intelligence. The ability to kind of aggregate all of the data of your customers under one roof within a dashboard, which allows your audit team to review it to make sure there’s no anomalies, but also to make sure your wealth managers are reviewing it to make sure you are not losing AUM. Your demographics are normalized, anything you can imagine for the BI.

And we will close that client journey with Advisor Briefcase again, that marketing communications tool. Now that you have these customers under your roof, you can actually use again that marketing communications to further educate your new clients on trends, more important data, newsletters, things like that. Community banks oftentimes don’t have a dedicated marketing department. In fact, many times, marketing person might be the administrative assistant or someone in operations. Perhaps a personal banker that does two roles. Advisor Briefcase, a very inexpensive tool, will help provide that content, that extra little lift that a bank needs to kind of stay above and beyond and keep that relevant data going to their customers. That’s what sets us apart, is that we provide a technology stack that spans the client journey.

Kelly Coughlin:

And all of that is allegedly simple and repeatable.

Tony Stich:

Simple and repeatable, and we promise you that. It’s simple and repeatable. Of course, technology requires a bit of adoption. There certainly is a learning curve. However, we make it as seamless as possible, especially for these community banks. We will again come in, we’ll educate through the procurement process, through the implementation stage, and then we have account managers dedicated to you going forward. After the technology’s implemented, we check back. We make sure everything’s going well. If it’s going really, really, really well, we’re going to write a case study on you. We’re going to brag about you. We’re going to show our friends about you, because we know NaviPlan and our other technologies are going to help the banks stave off robo advice. They’re going to help these community banks stave off the bigger competitors. They’re going to keep you relevant during this consumer revolution. They’re going to keep you relevant during this generational wealth transfer of $30 trillion in North America alone. We’re going to help keep you relevant so that you are maintaining that AUM, maintaining those bank accounts, but also growing your business through digital technology.

Kelly Coughlin:

Yes. That’s good. If a bank wants to explore this further, should I just have them give you a call, then you can get them routed to the right person? Would that be fair enough?

 Tony Stich:

You know what? That’s probably the best approach. Our 800-number is 855-885-7526. If you want to shoot us an email, it’s simply sales@AdvicentSolutions.com, but I want to encourage your listeners to visit Advicent, A-D-V-I-C-E-N-T.com, because we have a great deal of thought leadership content, blogs, videos, and you know what’s really important for these C-Suite guys? They should be reading our white papers and downloads. We have some really intelligent stuff on client journey mapping; on staying relevant in the year 2020. This kind of, this is the kind of documents that these guys and gals want to read, because it’s going to help them craft their one, three, and five year strategies and help them relay that message both vertically to their counterparts, and of course, horizontally.

Kelly Coughlin:

Tony, that’s good stuff. Okay, thanks a lot for your time. I appreciate it.

Tony Stich:

Thank you, Kelly. We’ll talk soon.

Kelly Coughlin:

Well that concludes Part One of my interview with Tony Stich, Director of Global Marketing for Advicent. In part one we spent quite a bit of time on robo-advisory technology and the difference between that and financial planning technology. And as I see it, the difference really is you have a system…a robot…with all its behind the scenes algorithims and logic creating a financial plan as opposed to Advicent’s advisor-driven technology, where you have a human wealth advisor utilizing some pretty cool technology with algorithims and logic that are simple and repeatable…I think you heard Tony say that a few times. In part two, we will focus on how Advicent integrates with a bank’s platform. How the technology passes bank procurement and vendor management standards and how Advicent’s technology can help a bank compete against non-bank brokers and advisors. Thanks for listening.

Announcer:

We want to thank you for listening to the syndicated audio program, BankBosun.com. The audio content is produced and syndicated by Seth Greene, market domination with the help of Kevin Boyle. Video content is produced by the Guildmaster Studio, Keenan Bobson Boyle. Voice introduction is me, Karim Kronfli. The program is hosted by Kelly Coughlin. If you like this program, please tell us. If you don’t, please tell us how we can improve it. Now, some disclaimers. Kelly is licensed with the Minnesota State Board of Accountancy as a Certified Public Accountant. The view expressed here are solely those of Kelly Coughlin and his guests in their private capacity, and do not in any way represent the views of any other agent, principal, employer, employee, vendor, or supplier.