Episode 300 with Joel Bruckenstein | E300
How advisor tech has evolved in the last 30 years.
On this episode, host Jason Pereira talks to Joel Bruckenstein known as the "godfather of advisor technology" in the US. Joel is the President of Technology Tool, a well-known consultant and writer in the financial advisory technology space. Joel is the President of Technology Tool, a well-known consultant and writer in the financial advisory technology space. The episode focuses on Joel's journey and how technology for financial advisors has evolved over time.
Episode Highlights
01:26: Joel shares that he spends a significant amount of time consulting, evaluating new products, and engaging with advisors.
01:55: Joel shares his career journey, mentioning that he was involved in the equity derivatives part of the business in the mid-90s, which required him to obtain various securities licenses.
02:50: Around the year 2000, Joel co-authored a book on the topic, which was published by Bloomberg Press. This marked the beginning of his deep involvement in the world of advisor technology.
04:13: When Joel began his journey, the wire houses, and many independent broker-dealers (IBDs) predominantly used proprietary technology solutions. Independent advisors had limited options in terms of technology.
06:07: Joel reflects on the fundamental technologies that dominated the advisor technology landscape during the early days of his involvement. He notes that most of the solutions at that time were centered around core areas such as Customer Relationship Management (CRM), portfolio management, and financial planning tools.
08:28: Joel mentions that in the early days, many advisors didn't even have email addresses, and clients were not connected online. Furthermore, advisors didn't have websites, and he recalls advising them to get email addresses, which some found to be a crazy idea.
09:41: The cost of financial products, such as mutual funds, was much higher 30 years ago, and ETFs were not yet available.
11:16: The conversation highlights how technology has allowed advisors to maintain their margins while delivering more value and services to clients.
11:56: Jason shares a common observation that many outsiders, including technologists and engineers, often believe that technology will replace advisors and reduce their numbers.
12:57: The Fintech industry will continue to evolve, and over the next five years, the number of clients an advisor can effectively serve will likely double or triple due to mass personalization.
16:05: Joel emphasizes the importance of selecting the right custodian as a core decision when building a tech stack for an advisory business. He notes that many advisors tend to overlook this decision and focus solely on price rather than evaluating custodians based on their technology offerings.
17:14: Jason agrees with Joel's observations and highlights the proliferation of niche solutions that address specific planning issues, which has become more prevalent over the last decade.
21:49: Joel discusses how data will impact advisors going forward. He links data to "digital gold" and emphasizes its potential value.
24:16: Joel highlights how smaller advisory firms may outsource their technology needs to specialized providers.
25:48: Joel emphasizes the critical role of data security and mentions that advisors need to protect their data, which may lead to an increase in mergers and acquisitions (M&A) within the industry.
29:05: Joel highlights a few noteworthy examples of AI in the industry, such as FP Alpha, MG Suites, and Salesforce's Einstein. These solutions are starting to demonstrate the capabilities of AI in various areas within the advisory space.
29:27: Joel suggests that AI can be leveraged for more straightforward tasks, such as generating drafts for blog posts and even assisting with email replies for routine requests.
32:38: Joel explains that he began conducting surveys around 2008 with the goal of providing information to the industry about the software used by various cohorts of advisors and their satisfaction levels with that software.
34:52: People's satisfaction tends to be higher when they are not aware of alternative solutions or when they have limited exposure to different technology options.
36:13: Joel discusses the evolution of advisor technology, the importance of staying informed about tech trends, the T3 Technology Tools for Today conference, and the annual T3 Advisor Software Survey.
39:28: Joel emphasizes the need for financial advisors to regularly review their technology stack to remain competitive and shares insights into the changing landscape of AI, data, and cybersecurity in the advisory space.
Discount Code and Links
Discount code for advisors for $200 : Woodgate200
3 Key Points
Joel reflects on how the landscape of advisor technology has evolved since he first started in the field.
Joel and Jason discuss the common complaint among advisors about margin compression and increased competition in the industry due to technological advancements.
Joel highlights the growing importance of data and AI in the advisory industry. He explains that data is like digital gold and can be leveraged for various purposes, including AI-driven insights and analytics.
Tweetable Quotes
“It's essential to remember the technological context of the time when he started, as they were still in the era of DOS, with Windows emerging as a platform.” – Joel
“Technology has completely transformed the way advisors do business, and he views these changes as positive. It has made advisors more efficient, allowing them to serve more clients and provide a better user experience for both their employees and clients.” – Joel
“The financial advisory industry often takes longer to adopt technology due to its highly regulated nature.” – Joel
“Historically, many advisory firms have overspent on portfolio-related tasks and underspent on other aspects of their business.” – Joel
“Clients, especially the next generation, are more interested in comprehensive financial planning services than simply trying to beat the S&P 500.” – Joel
“As advisors gain more control over their data, they will also be responsible for protecting it. Cybersecurity will be a crucial consideration to safeguard sensitive client information and maintain trust.” – Joel
“Historically, many advisors have relied heavily on third-party providers for technology services, and there's a lack of awareness and education about cybersecurity risks. As data becomes a more critical asset, advisors will need to invest in cybersecurity measures and potentially seek M&A opportunities to gain the scale required for comprehensive security solutions.” – Joel
“The T3 report aims to inform the industry about technology trends, adoption rates, and the satisfaction levels of advisors with the software they use. It provides valuable insights for advisors and technology providers and helps them make informed decisions about technology solutions.” - Joel
Resources Mentioned:
Facebook – Jason Pereira's Facebook
LinkedIn – Jason Pereira's LinkedIn
Woodgate.com – Sponsor