Actionable Strategies was part of an exclusive panel on the broker/dealer market. Actionable Strategies CEO Jeffrey Wu discussed industry trends, market structure changes, technology strategies and critical challenges.
Actionable Strategies, a boutique consulting firm serving clients globally, was part of an exclusive panel on the broker/dealer market. Actionable Strategies CEO Jeffrey Wu discussed industry trends, market structure changes, technology strategies and critical challenges. The forum was part of Fidelity Investments national sales conference held in Boston.
"Actionable Strategies was asked to represent consulting firms serving the broker/dealer space. In addition to providing insight into the broker/dealer market, we dissected the competitive landscape of clearing providers", explained Jeffrey Wu, CEO of Actionable Strategies. The other panel member was a research director from a leading analyst firm covering financial services. "The forum was highly interactive and we provided insight into specific challenges faced by broker/dealers executing end-to-end processes on the desktop without manual intervention or re-keying. To deliver value to brokers and advisors, the foundational technology requirement is seamless access to data. We provided an impartial analysis of why IT organizations are not aligned to expectations of the business: facing expense pressure, many firms focus on lower unit cost but experience higher total cost and dramatically slower time to market. Furthermore, many product development organizations are not market driven, lack agility and are not experienced with cutting edge technologies."
Actionable Strategies spoke on key trends that will transform the needs of the broker/dealer space. Notably, the increase in fee-based business inside broker/dealers will cause evolution in go-to-market models which will subsequently force change in the back office. Seamless workflows are critical in the front office but require ubiquitous and actionable data. It was noted that widespread efforts are underway to aggregate and rationalize data but the problem has not been solved by any particular player. One constraint on the provider side was the use of lower cost IT generalists who lack overall understanding of broker/dealer processes and the underlying data implications.
Changes in client demographics have also driven needs at the broker desktop. An older client base has a differing mix of asset classes that include products such as annuities, illiquid assets and insurance products. Strategies shift from wealth accumulation to wealth transfer and eventually distributions. The fundamentally different needs require new processes and information. Providing an overarching view is an unmet need with point solution vendors attempting to fill the void.
On the competitive front, product strategy and differentiation were key selling points. With clearing and settlement being treated as commoditized services, delivering real value at the front office is the competitive driver. This is particularly important as the total available market has shrunk with a number of large banks moving from fully disclosed to self-clearing.
Compliance remains a major concern at the board and executive levels. Compliance and risk management organizations are now major consumers of integrated data. Rather than being a constraint, data aggregation can benefit other areas of the correspondent. Forward thinking leaders seek points of leverage in the data with the ability to make incremental investments on top of an existing data platform. One example provided was market segmentation and targeting using existing customer data. It was also noted that better producers in the wirehouses were not contemplated becoming RIAs not just because of retention, but because of the compliance and back office challenges when going independent.
More details on trends with correspondent clearing firms and broker/dealers will be published in a report later in the first quarter.