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NextGen Investment Advisory Firms--Go Tech Or Go Home!

Every day, I roll up my sleeves with the goal of helping (even a teeny bit) move an entire industry from the stone age to the space age. So I thought it wouldn't hurt spending a little time seeing and hearing what a group of financial services "techies" thinks about technology and the future.
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When a friend and colleague of mine suggested I attend an event called "Finovate--A showcase of pre-selected financial services technology firms" I was immediately skeptical. FinTech? An oxymoron to most inside the financial services industry, and those who provide services to those firms. These are an entrenched group of (largely) left-brain quants of which technology does not compute!

Every day, I roll up my sleeves with the goal of helping (even a teeny bit) move an entire industry from the stone age to the space age. So I thought it wouldn't hurt spending a little time seeing and hearing what a group of financial services "techies" thinks about technology and the future. Naturally, the conference was dominated by men, so there was no line in the ladies room. (Note to self: change that...)

It was an amazing sight: A "Ted Talk-like" seven-minute performance format, during which vendors demo, describe, and pitch their newest innovations to financial services firms. It is in a theater, and "performance art" at its best. These guys are "pitching" for their lives. They are for the most part early-stage companies seeking the attention of the established financial services brands. They are looking for cash and clients--both attend Finovate.

While there was a myriad of banking/financial services products which were demoed and featured for the variety of sector in financial services including many apps/innovations for payments, authentication/security, financial literacy and much more. They were all like shiny pennies to me: I am a "closet geek" and was really excited to see, touch, and, in some cases, listen to how technology can change up financial services.

But, I confess, I lost my heart to the first shiny penny I saw. The colorful, graphically cool screen drew me in immediately, and I was able to see the future like a crystal ball. What I was looking at was "Pinterest" for investing - images of investing ideas that could be moved and changed and shaped to create customized portfolios. The company was Motif Investing - legally a broker/dealer but, in fact, so much more. They have an all-star line-up for a "start-up" including Arthur Levitt and Sallie Krawcheck on their advisory board with Goldman Sachs, a lead investor. It appears that I am "late" to this party...

There were so many shiny pennies that I want my readers to see. But, the blog length does not permit that. So, instead here is the Finovate "Best in Show list" so that you can see and feel the future of financial services technology: All of the conference attendees voted to determine their own favorites.

The confluence of most of my work centers around is next gen, wealth, technology, and how to communicate multi-generationally which modes and which words resonate with each generation. Now, we have the JOBS Act about to be enacted: hedge funds and private equity will be able to make the public aware of their investments. And small businesses are expected to flock to crowd funding platforms as a source of capital. How will financial services technology play here? In a starring role!

More and more types of investments, more transparency, more information... what is a wealth advisory firm to do? Go tech or go home, I say. The future lies in next gen's ability to intuitively choose and explore investment options that have the most affinity or personal appeal to them. Study after study cites that the next-gen set is more easily influenced by their peers and their own passions. They are not seeking the loyal, long-standing relationships like their parents, the baby boomers, did.

Motif Investing is the embryo of an idea that I predict will be the template for investing platforms for self-directed investors to use. Its user interface is engaging, and I am certain that if they measured time spent on researching investments, and financial literacy, it would be via an intriguing screen such as theirs. Motif Investing's value proposition is allowing investors to "shape their own investments by using variables far more intangible than just past performance or track record.

Next gen investors have shown a preference for "doing good while doing well" and "transparency of investments". They are also willing to sacrifice performance for passions, affinities, and connecting with others on community projects. Like engaging on retail clothing websites that allow users to virtually trying on clothes or simulate the user experience of sitting in a car that drives by itself, looking at the home screen of Motif Investing I could almost see the future investors who will be looking for a user experience similar to this one.

It's not hard to imagine what our new-fangled financial services world will look like when you attend something like Finovate--which is a forward-thinking showcase for a very conservative industry. What you get there is a taste of the Jetsons-like future where payments, wealth management, investments, financial literacy and so on will be conducted using a variety of user interfaces. The future user interface especially for topics within financial services needs to be much more engaging using gaming, voice, mobile, and graphics which will create more intuitive platforms. Godspeed to those executives who attended Finovate, will bring back ideas, and will push their firms toward technology and innovation!

The new generations don't have to "learn" how to use an iPhone; it's natural to them. So that's why I say, "If you want to attract the next wave of UHNW/HNW investors, go tech or go home." First movers in banking, wealth management and other financial services sectors will see that technology can be a differentiator, and thus a revenue generator. Innovation and financial services need to become more aligned by pivoting off of the old philosophy that a technology spend was an expense item only.