Technology’s rising role under DoL fiduciary

DoL fiduciary rule and technology

Since the Department of Labor published its fiduciary rule in April, major participants in the industry are pouring in money and time to make sure they are compliant before April 10, 2017. The operational challenges and changes brought about by this rule will also affect the way technology is used to provide those services.

The DoL rule, meant to protect common investors, requires financial advice and retirement guidance over 401(k) and IRAs to be given under a fiduciary responsibility. This means advisors must put the interests of clients first, before the advisors’ own interests or those of the advisors’ firms.

For example, advising a client to buy a product issued by the advisor’s firm, while a similar product with lower fees exists in the market, could be a breach of fiduciary responsibilities. Advice like this could subject an advisor and his firm to regulatory and litigious risk.

Capturing and processing customer data is a significant challenge with the DoL fiduciary rule. In order to comply with some aspects to the rule package, data that isn’t currently tracked and collected must be made available. For other parts of the rule package, data that now exists in separate silos must be aggregated together.

For example, if a worker moves to a new workplace and wants to rollover her 401(k), a broker-dealer will need to build a detailed ‘decision tree’ when considering which product to recommend, both for the process itself, but also to prove to regulators and lawyers that the decision was fiduciary. In some cases, manually gathering all the parameters affecting the decision could take weeks, a process some vendors are trying to automate.

About 50% of 401(k) rollovers to IRAs can be attributed to a decision by an advisor, a sum totaling about $320 billion each year, according to Yuval Zurel, CEO of FeeX, a company that uses big data to determine whether a 401(k) rollover is compliant with the new DoL fiduciary rule. Transparency and compliance costs might make this business way less profitable. For that reason, some advisors are mulling exiting the business. Others are crafting new compensation models.

FeeX was built as a portfolio dashboard to assist advisors. An advisor sends a opt-in form to a client, connecting FeeX’s platform with the client’s accounts. The technology firm’s algorithms then hunt, combine and crunch data from the aggregated accounts, producing a report that compares the costs of initiating a rollover to an advisor’s IRA product versus maintaining the existing 401(k) account. Tools such as FeeX can solve the cost problem associated with proving advisor advice was fiduciary.

Large firms surveyed by Deloitte estimate their costs of becoming compliant to be over $38 million, with additional ongoing expenses to vendors and suppliers to manage the duplicate systems at $9.5 million. Startup and ongoing compliance cost estimates for medium-sized firms may run $23.1 million and $5 million respectively. Besides projected human, software and hardware costs, advisors expect to loose money due to fee-related changes associated with the rule.

The new DoL rule may take billions of dollars off the table, as the industry benefited from data opacity until now, Zurel said.  Those who choose to embrace transparency, though, might find it to be a competitive advantage and a differentiator. “A company can’t truly be transparent without technology,” he remarked.

One concern raised by opponents to the rule package is that smaller retirement accounts may be orphaned, as lower fees will make them unprofitable for brokers. Technology consultancy CGI recommends that firms handle smaller accounts through roboadvisors, which will lower the cost of managing those accounts.

There have also concerns whether the use of automated investment advice can be regarded as fiduciary. “The idea of a robotic entity that automatically generates investment advice certainly bumps up against what we would traditionally think of as a fiduciary,” said SEC Commissioner Kara M. Stein during at guest lecture at Harvard Law School last year. It is possible that some robos, those with better artificial intelligence capabilities and better access to data, will be considered fiduciary, while others will not. Regulators will need to answer these questions in the coming years.

Advisors can leverage the implementation of new technology both to comply with the new rules and provide best quality advice. Advanced software with various level of machine learning capabilities can help advisors better tailor advice and products to their clients and defend that decision if the need arises.

“Technology will be the linchpin that helps hold together financial firms’ operations under the fiduciary rule regime,” CGI said.


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4 new investor-grade lead generation tools

tools to generate new investor leads

You know the drill — investment businesses require new clients all the time. Between fluctuations in the markets which impact AUM numbers and natural attrition, for a financial business to grow, you need to have a steady stream of new prospects all the time.

Investment customers are getting savvier. Though wealthy prospects still tend to use investment advisors, they’re more used to getting financial information for free online. So, the bar’s been raised in terms of needing to demonstrate that you can provide value from the first touch point with your prospects.

The good news is that every day that passes, clients are online more and more. Even if they’re not participating heavily on social media, they’re more discoverable. There are so many new tools out there that will help you identify your ideal prospect, define a communication channel and communicate with him or her, and track all that activity.

The result? More leads, more conversions, and more clients for your business.

lead generation tools for investment businesses

Here are some of the tools I’m familiar with and have used to generate millions of dollars of business for my clients.

1. Revue: the easiest tool to create a weekly email newsletter

revue as a newsletter tool for investment advisors

What is it: Newsletters are still amazing ways to create sales leads and nurture existing ones. They’re amazing magnets for new clients but it’s incredibly surprising how few firms really use them. Revue is the easiest way I’ve found to create a weekly newsletter, manage subscribers, and distribute it on out (you can see — and sign up for — the Tradestreaming Newsletter here). The newsletter look great, too. Sure, you can use MailChimp which is an awesome, cost-effective newsletter management system but it doesn’t get easier than Revue. There’s no need to pick templates, fiddle around with your lists, schedule, etc.

How it works: Sign up for free to Revue and you can immediately start compiling a subscriber list and your first mailing. I use a plugin in my browser and click a button when I find an article I’d like to include in my newsletter. Once I’m ready to send, I log into my account, do some light editing, and click ‘send’. It really is that easy. Revue also provides you with a hosted archive of your old newsletters and a signup page you can share with your users.

Where to learn more: Revue

Alternatives: Curated

2. Socedo: Automated social media lead generation

Automating social media leads with socedo for investment business

What is it: For those of you not familiar with Socedo, the firm’s tagline (Automated social media lead generation) might sound like a joke. While Socedo may not be fully automated (you’ll need to manage the system), it is definitely not a joke when it comes to lead generation using Twitter.

How it works: Socedo tees up daily leads for you everyday based on keywords you identify for Twitter users (those keywords can be found in user profiles or in the type of communication that they use). From there, you can tell the system to favorite leads that fit your profile and retweet them (that gets you on the prospect’s radar). From there, you can pre-program Socedo to direct message (like an email through Twitter’s messaging system) certain prospects with your outreach message, creating engagement. From there, I’ve seen successful salespeople take the conversation to email and begin closing prospects.

Where to learn more: Socedo

3. DiscoverOrg: The leading sales and marketing intelligence solution

discoverorg for investment businesses

What is it: A successful marketing campaign for an investment advisor may mean reaching out to senior management at a company that recently IPOd (heck, part of the investor acquisition strategy employed by leading online investment advisor, Wealthfront, was to go directly to newly-minted Twitter millionaires). But how do you identify senior and mid level management in these companies? That’s where DiscoverOrg comes in — the company boasts that it has in its database 400,000 contacts in the IT, Marketing and Finance departments at over 20,000 companies. DiscoverOrg’s system provides direct phone numbers and email addresses for these contacts.

How it works: DiscoverOrg uses its own database skills and cold-calling techniques to break down companies, so clients don’t need to. The company claims it has the only database built on primary research, which means however the firm accomplishes it, they have people calling in to top tech firms to create organizational charts from the outside. Clients get access to existing org charts and leads or DiscoverOrg will work with them to break down new target companies. These leads are easily fed into Salesforce-type CRMs and the proactive OppAlerts can be used by sales and marketing people in the investment industry to proactively target prospects believed to be warm.

Where to learn more: DiscoverOrg

Alternatives: RainKing, Unomy

4. AutoPilot: Easy and visual marketing software for automating the customer journey

marketing crm and leads with autopilot

What is it: There are a lot of platforms called inbound marketing automation. Companies like Hubspot and Marketo help marketers create downloadable content to provide to a prospect in return for lead information. In turn, these systems continue to automatically deliver valuable content to these leads over time, helping to nurture and convert them. Thing is, inbound marketing is passive — it relies on time and ongoing communication to allow the lead to mature. AutoPilot combines this type of inbound marketing automation but has tweaked it so that anyone doing sales prospecting can automate his process. The end result should be not just leads in a funnel but actual real-like clients.

How it works: Create opt-in forms to provide to leads using Autopilot (maybe you provide a report in return for their information). Using a visual builder, Autopilot users can create a customer journey that includes emails, SMS, and even postcards to continue to communicate with prospects while building more and more intelligence around the lead and his/her behavior. Lastly, Autopilot has good analytical tools to help guide users to see how effective this type of marketing is and to tweak if necessary.

Where to learn more: Autopilot

Alternatives:, Salesloft


Generating leads is obviously just the first part of a good marketing strategy for your investment business. You’ll then need to nurture and convert them (and obviously, once customers, you’ll need to delight them and keep them coming back for more). But these 4 tools should take you a long way towards creating a vibrant funnel of prospects.

What tools are you a fan of? What are you using to generate leads? Let us know in the comments below.

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How to produce a financial podcast

One of the most popular pages on Tradestreaming is our Best Investing Podcasts page. When I encounter a valuable resource, I continue to add it to that page.  Slowly, I’m beginning to see more and more financial professionals producing their own podcasts.  That’s awesome — for those of you contemplating how to create a financial podcast, I put together a how-to piece to help. Continue reading “How to produce a financial podcast”