As our industry continues to grow, one of the most exciting prospects for me is the ability of clearing firms to step into a more prominent role in helping clients, broker/dealers and advisors navigate the complexities of wealth management. Doing so will require taking a comprehensive look at our technology and reimagining how it best serves us—a difficult but worthwhile task, but one that is very achievable.
It's no secret that there are a number of different customer experiences and technologies that many clearing firms are trying to navigate. As newer advisors, broker/dealers and clients emerge, our industry must adapt to provide better economies of scale for advisors and firms and to help connect diverse experiences.
It is time for the clearing industry to take more of a leadership role and, in turn, future-proof themselves and their clients.
Shifting the technology paradigm by providing better customer service
Clearing firms rarely interact with the end investor, which can lead to disjointed and outdated technology with a diminished focus on relationships. This should not be the case.
Despite the convenience of online communication, counselors (and their clients) remain interested in having conversations. After all, we all crave human connection. In this sense, we must focus on using technology to enable and foster better customer relationships. But over the past few years, I've noticed a disturbing trend among larger firms. These firms have reduced the service they make available to “smaller” broker/dealers and RIAs. I strongly believe that we should leverage technology to deliver better experiences while continuing to provide direct access to the people who need us most when they need us. Yes, technology can simplify tasks that don't require human touch, but people should always be available to help.
Taking inspiration from Big Tech
At its core, technology is about creating better, more memorable experiences for its end users. Advisors, for example, want customization, but with scale. This is where cleanup should focus: finding ways to remove the number of screens and systems and create greater efficiency through modern rules, workflows and connected platforms.
Consider Android's Google Play store, which provides a centralized platform that allows users to access millions of third-party apps for Amazon Alexa or Google Home like smart lights, thermostats, security cameras and more. Or Google Chrome, which gives users access to productivity tools like ad blockers or password managers. These open yet controlled environments drive innovation and flexibility while maintaining a cohesive user experience and one that works best when data is connected.
Similar to how technology uses customer data to provide better and more targeted online experiences, cleaning firms need to improve their data collection to better improve the services they can provide. While clients will never have access to a clearing firm's backend, they can work behind the scenes to provide advisors with a richer user experience that will benefit them. Data already helps our firms create insights that drive greater efficiency, effectiveness and the ability to personalize experiences for brokers/dealers, advisors and their clients. For example, we may use intelligence to leverage data from a customer profile to provide them with access to better rates on a mortgage or access to a pre-approved line of credit. It's not just about selling products, but helping broker/dealers and their advisors be more holistic in serving the investor. By providing wisdom, intelligence and perspective, we can leverage our perspective to help broker/dealers better support their clients, which is definitely a win-win.
Engage in Change Management
Clearing firms have traditionally been seen as silent partners and while I believe they should operate smoothly in the background, they should also focus on building relationships that provide greater efficiency, usability and market competition for their partners.
Commitment to change management is critical to this success. Today, many clearing firms are working on a different support system than their broker/dealer clients. This can lead to confusion and can create unnecessary challenges because we are not all looking at the same screen. To be in sync, we all have to read from the same sheet of music. And when clearing firms can share insights on the regulatory landscape, for example, with their partners, it allows them to benefit from our scale. But our ability to do this relies on adoption, which will require us to develop a feedback loop process to drive sustainable improvement.
You cannot replace all people with technology
It is my opinion that technology enables better human interactions; it does not replace them. Clearing firms must use technology to provide insights and information and perform mundane, non-value-adding tasks so our clients can create more valuable relationships with their investors.
Doing all of this will require our industry to challenge our change management skills, find better workflows, and think more creatively about our role in the ecosystem.
David Crow, EVP, Head of Axos Clearing