What digital wealth management can learn from successful online brokers with MyVest’s Charlie Haims

Charlie Haims is Vice President of Marketing at MyVest.

What is MyVest?

MyVest is a pioneer in holistic wealth management technology for financial institutions.  Our enterprise software platform allows wealth management firms and their advisors to offer holistic, personalized, tax-aware portfolios at scale.  Advisors can only offer highly personalized portfolios like this to their best clients on a limited manual basis, but our platform allows advisors to offer best-practice portfolio management to all clients, large and small.

In the beginning, we worked with larger, traditional firms, but more recently, we’ve connected our sophistication in portfolio management to the rise of the digital wealth opportunity and now power one of the leading B2C digital wealth startups.  So, we can support all types of advisors serving the entire spectrum from mass market to high net-worth.  

What advantage does an advisor have armed with MyVest competing against the robos?

Compared to many robo-offerings, MyVest offers advisors more sophistication, and we offer their firms flexibility in scaling up these offerings across different types of advisors, client segments, and channels, while maintaining centralized control and oversight.

For advisors, they can offer every client a portfolio that is holistic, covering an entire household, personalized to each investor’s unique situation, and tax optimized.

For the firm, they get the flexibility to tailor different levels of control for different advisors based on their experience or their client base – from highly centralized home-office driven models and portfolios to advisor-managed ones, to hybrids in between.  The icing on this multi-layered cake is that we ensure every personalized portfolio is being managed per its investment policy statement on a daily basis, which is a big plus for trading, operations and compliance.

Imagine a bank that simultaneously serves mass market, mass affluent and high net worth segments with different wealth management offerings, investment vehicles, pricing, service models and advisor teams for each. Many banks use separate infrastructure for these different programs, but with MyVest, they can bridge these silos and do it all on a single, unified platform. Then we can help connect all of that configuration and sophistication to modern digital tools to help a traditional firm prepare for the future of wealth management.

Who are your customers? What are you hearing from them is their biggest challenge?

We address the needs of enterprise-level wealth management businesses at broker-dealers, RIAs, banks, and other service providers like custodians and turn-key asset management providers (TAMPs).

The biggest challenge we hear from customers is how they can transform their businesses from the old way of delivering wealth management to a new, client-centric approach.  These trends include the move from a product- to a client-centric mindset, from performance- to goals-based wealth management, from account-by-account to household-based management, the upcoming DOL fiduciary rule, demographic shifts, and new digital tools.

MyVest helps our customers with this kind of strategic transformation by being more than just a tactical product, but a long-term strategic partner.  We work like a consultant with our customers to design new offerings, bridge silos, simplify infrastructure, and prepare for the future.  The combination of our portfolio management sophistication and flexible platform I mentioned allows a firm to grow with us over time into a more scalable, profitable business that puts the client first in everything they do.

How do you think the whole excitement around robos plays out?

The good news with the excitement is that it jump-started a new level innovation in wealth management that had stagnated since the dot-com days and has driven more advisors and investors to adopt a more systematic approach to portfolio management.

Recent events demonstrate how this will play out where some startups are pivoting and incumbents are either launching their own, like Schwab and Vanguard, or acquiring, like BlackRock with FutureAdvisor and Northwestern Mutual with LearnVest.  I expect we’ll see a lot more retail brokerages and banks invest in digital wealth, plus we’ll see new players like asset managers attempting direct-to-retail distribution, custodians developing these services for independent advisors, and traditional advisors building or partnering to create their own offerings.

Retail client acquisition is expensive for any new offering given the brand and budgets of the incumbent retail investor firms and given history shows that investors stick with who they know and trust.  So I think the trick for new offerings to get critical mass in a crowded marketplace is through differentiation by carving out a unique niche in product, service or channel.  We’ve seen examples of this from startups that target investor niches, B2B advisor services, small business retirement advice, and many new financial planning and portfolio analysis initiatives.

In your career, you’ve personally been an integral part the industry’s move towards digital delivery of investment services beginning with the online brokers. What challenges did you face with them and do robos face similar/different challenges?

I was part of building one of the first online investing companies, DLJdirect, in the late 1990’s, and then at E*TRADE and Schwab.  The focus then was building the tools, data and education to help millions of new self-directed investors evaluate and trade individual securities.  As an industry, we accomplished a lot in giving consumers personal control over what was previously an offline investing world controlled by very expensive, opaque, inefficient intermediaries.

Back then, the industry’s key challenge was onboarding and educating a huge wave of brand new active investors overnight, and operations and customer service struggled to keep up with their diverse demands.  A related challenge was that many investors did not manage their portfolios in prudent ways over time (By the way, the ‘robos’ are addressing this second problem).

Today, there is again a big onboarding and educational challenge, but in a different way. Instead of a rush to keep up with a huge wave of newly minted active investors, the ‘robos’ big educational hurdle is to first persuade enough investors to adopt a new approach to investing, and then second to keep them engaged on a very long path towards achieving their goals, something traditional advisors do well but may be a challenge for the purely automated robos.

I also want to call out that this ‘robo’ thing is not new.  I knew some of the first automated advice launches in the late 1990’s, and like your recent interview with Peter Nesvold at Silver Lane who taught us how we could learn from the history of online banking, we can also learn directly from these early efforts.

Some of them succeeded by being:

• initiatives of large diversified firms, like Amerivest from Ameritrade
• acquired, like Sharebuilder by ING Direct
• diversified into a broad platform, like Foliofn
• backed by patient investors and finding a less competitive niche to maintain independence, like Financial Engines and GuidedChoice

Now, new innovation is building on these early examples.  But there is still a huge need to improve the financial outcomes for millions of American families, so there’s still a lot more work for all of us to do in making wealth management more client-centric.

Photo credit: The Nick Page via VisualHunt / CC BY