As our industry continues to grow, one of the most exciting prospects to me is the ability of clearing firms to step into a more prominent role in helping clients, broker/dealers, and advisors navigate the intricacies of wealth management. Doing so will require a comprehensive look at our technology and reimagining how that best serves us—a hard but worthwhile task, but one that is very achievable.
It’s no secret that there is a disparate array of customer experiences and technology that many clearing firms are trying to navigate. As younger advisors, broker/dealers and clients emerge, our industry must adjust to provide better economies of scale for advisors and firms and help connect disparate experiences.
It’s 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 Offering Better Customer Service
Clearing firms rarely interact with the end investor, which can lead to disconnected, outdated technology with a diminished focus on relationships. This shouldn’t be the case.
Despite the convenience of online communication, advisors (and their clients) remain interested in having conversations. At the end of the day, we all crave human connection. In that sense, we should be focused on leveraging technology to enable and foster better relationships with clients. But over the past few years, I’ve noticed a troubling trend among larger firms. These firms have downgraded the service they make available to “smaller” broker/dealers and RIAs. I strongly believe we should be harnessing technology to drive better experiences while continuing to provide direct access to the people who need us the most at the moment they need us. Yes, technology can streamline tasks that don’t require a 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 personalization but with scale. That’s where clearing should be focused: finding ways to remove the number of screens and systems and creating greater efficiencies through modern rules, workflows and connected platforms.
Consider Android’s Google Play store, which provides a centralized platform that allows users access to millions of third-party apps for Amazon Alexa or Google Home like smart lights, thermostats, security cameras and more. Or Google Chrome, which provides users access to productivity tools like ad blockers or password managers. These open yet controlled environments foster 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 experiences online, clearing firms must improve their own data collection to better enhance the services they can offer. While clients will never have access to a clearing firm’s backend, they can be working behind the scenes to deliver a richer user experience to advisors which will in turn benefit them. Data already helps our firms create insights that drive greater efficiency, effectiveness and the ability to personalize experiences for broker/dealers, advisors and their clients. For example, we can use intelligence to harness data from a customer profile to offer them 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 point of view to help broker/dealers better support their clients, which is clearly a win-win-win.
Engage in Change Management
Clearing firms have traditionally been viewed as silent partners, and while I believe they should operate seamlessly in the background, they should also be focused on building relationships that provide greater efficiencies, usability and marketplace competitiveness for their partners.
Engaging in change management is critical to this success. Today, many clearing firms are working on a different backend system than their broker/dealer clients. This can lead to confusion and can create unnecessary challenges because we’re not all looking at the same screen. To be in sync, we must all be reading from the same sheet of music. And when clearing firms can share insights on the regulatory landscape, for example, with their partners, that allows them to take advantage of our scale. But our ability to do so relies on adoption, which will require us to develop a feedback loop process to drive consistent improvement.
You Can’t Replace All People with Technology
It’s my view that technology enables better human interactions; it does not replace them. Clearing firms must use technology to both serve up insights and information and perform mundane, non-value-adding tasks so our clients can form 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
