Tag Archives: CRM

The End of the Market Data Desktop (Part 2)

1 Jul

Last week I wrote “The End of the Market Data Desktop”.  Since that posting I received more than a handful of emails from friends, colleagues and clients telling me that I am crazy and that there is no way that financial professionals can do without market data, analytical tools, dashboards, streaming quotes, etc…

I Feel the Need

Let me first say that I was referring mainly to retail broker dealers and wealth management professionals in my post and I was definitely not making reference to institutional brokers/ traders, algo / black box guys, or any other financial professional that takes security positions or makes markets at the smallest fraction of a percent.  The reason for my posting was mainly to say that wealth management professionals need new tools that help them build deeper relationships with their clients as they continue to offset the analytical work to their portfolio managers.

I think there is tremendous upside in building next generation relationship tools for the wealth management professional.  Rather than security dashboards and scrolling news, perhaps it makes sense to have a dashboard aggregating everything about a client.  Does it make sense in this social media world to aggregate items such as Facebook and or LinkedIn updates, changes in credit ratings, money in motion events, news about the client, their portfolio or their interests, twitter posts, blog updates, etc…? After all isn’t sales knowing about your client and understanding their needs?

The second part of my posting was related to communication tools.  How does a wealth manager communicate with their client regularly? Few do the obvious – talk.  In the age of social media perhaps wealth managers can do better by having a communication platform that allows instant communication in a one-to-many platform, all wrapped around a compliant rich framework.  How great would it be if wealth managers were able to Tweet, update LinkedIn, Facebook, their blog, their website all with a single platform?  What about knowing how many of their clients are reading their weekly or monthly newsletter or perhaps worse, those who do not.  Social media is opening a new world for sell-side financial professionals and financial technology firms need to address these needs if they want to maintain their market share of the wealth manager desktop.

– Need for Speed

I thought that while I am at it, perhaps it makes sense to address the trading needs of the wealth management professional, particularly those who service the Family Office and Ultra-High Net Worth individual.

Yesterday, Scott Patterson of the Wall Street Journal wrote an insightful article “Fast Traders Face Off with Big Investors Over ‘Gaming’”.  In this article Patterson recognized that high-frequency traders who tend to trade on algorithmic triggers are front running traditional traders, those who are not using algorithmic models and who are not dialed in directly with the exchanges.  So, this brings me to the second part of observation.

Today, low latency trading systems are typically used by the buyside investment management firms and or hedge funds and are not used by traditional traders or portfolio managers who tend to support wealth management practices — atleast not the smaller shops. So my speculation is that at some point low latency trading systems will have to be built and or purchased from technology firms who support retail brokerages and wealth managers.  I would imagine that at some point wealth management firms will be fed up with the idea of losing out to algo traders who are making a killing on very small movements in spreads and execution timing differences.  Are we getting closer to the time when LPL, RayJay, TD, RBC, Pershing and others offer ultra low latency execution?

Overall it seems as though the wealth management technology vendors will continue to go through major changes – with one change coming in the form of building relationship tools and other ensuring that their back end trading and execution systems are more closely competitive with those systems supported by ultra low latency execution.

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The Parable of the Two Beggars

17 Jun

Last evening while sitting at a traffic light in a rather unattractive neighborhood, I took note of two people, each with their cup, asking the passerby’s to donate them some money.  Now what interested me to write this post were not the people, although they were interesting unto themselves, but rather the perceived agreement between the two of them.

It seems as though both of these people agreed to the lane they were going to service.  The woman had the two left lanes and the man had the two right lanes.  Interestingly though, the left lanes navigated the drivers into a rather impoverished neighborhood.  The two right lanes navigated the drivers to a rather wealthy neighborhood that stood just beyond the bridge ahead.

What I noticed in this situation were that the two right lanes were providing substantially more income to the gentleman, opposed to the woman who was servicing the two left lanes.  Now I am sure there are substantial sociological and psychological reasons for this – but I will spare you the intellectual banter.

In a very pedantic sense, it seemed as though the gentleman knew his market and where it was going and positioned himself in a way to ensure that he benefited the most from it.  Based upon my very short observation, I would guess that he made 5 times more than the woman did.

In addition to the right positioning, it seems as though the gentleman servicing the two right lanes also knew his marketing pitch rather well.  He told the same story every time and he did it in a less than 10 seconds.  “Hello sir/madam, my name is….can you help….it will greatly….thank you and God Bless”.

Same story every time….in the same location…with the best chance of success.

So how does this relate to financial technology companies or technology companies more broadly speaking?

It is probably not news to you, but technology companies tend to speak a different language, filled with words and jargon unknown to people outside of the industry and sometimes not known by people in the industry.  This type of jargon tends to permeate the entire marketing function within some of these technology companies.  The website, mailers, online communications, sales pitches all include this type of jargon.

Like the man servicing the two right lanes, marketing professionals within technology companies need to pay more attention to ensure that their message is crystal clear and can be consumed by all.  If you want to sell your technology to the IT staff only, then you should not worry about this.  However, if you want to sell upstream to the non-tech staff and engage the CEO, COO and other non-tech decision makers, do yourself a favor and streamline your message.

The second point of this post relates to your choice of lanes.  Many technology companies, particularly the start-up entrepreneurial one’s tend to jump between lanes, rather than taking the time focusing on the lane that will bring the most revenue.  From what I have seen working with small startups and mid-market technology companies is that not enough time is spent analyzing the lane.  Understand your market, understand what your competitors are doing and really understand the trends and where the road is headed.

A technology company that seems to have picked the right lane and has mastered their message is Salesforce.com.  Now I remember Salesforce when they were a startup and I know of them today.  Sure, the company has changed; it has become a behemoth of a company but it has remained consistent to its core message and has ensured that it does not deviate from its path.  They have many solutions with complicated technology, yet their marketing message is rather clear, “We are the enterprise cloud computing company”.  Rather straightforward and simple.

Do yourself a favor – DO NOT GET STUCK IN THE LEFT LANE!

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The End of the Market Data Desktop?

15 Jun

Coming out of the recent Credit Tsunami, and still recovering from the 2001 Internet Bubble, the Wealth Management marketplace in the United States is just starting to realize that market data, security analytics and research are secondary data needs in this ever so distrustful financial climate.

In the late 1990’s and into the very early 2000’s, wealth managers, financial advisors and retail brokers (herein defined as wealth management professionals) were trading stocks and bonds for their clients.  Unfortunately with the substantial drop in market values that came out of the 2001 bubble and the most recent financial crisis, substantial pressure has been put on these professionals to do more.  Rather than just trading stocks and bonds and losing 30-50% of a client’s value – which they can do by themselves – wealth management professionals have recognized that they need to spend more time with their client, understanding their needs and addressing their longer term plans.  Many of the more successful wealth managers have recognized that they should offload or outsource parts of their supply chain, such as portfolio analysis and financial planning.  By doing this, they have regained time, which they have put back into solidifying strong relationships with their existing clients and helping to win new clients.  Dow Jones recently published a paper titled, “Best Practices of Elite Advisors” and in this paper they clearly show that this business is all about relationship management and communication with clients.  When relationship management is central to a wealth managers tasks, they are substantially rewarded with incomes that far outshine those who are still picking stocks.

Although this change in the marketplace has happened over a 10+ year timeframe, it seems as though large, publicly traded financial information and technology providers have not adapted well to this changing marketplace.  Companies like ThomsonReuters, IDC, SunGard and others are still building out and spending substantial capital in developing desktops with all of the security information that a wealth management professional may have needed in the 1990’s.  Sure, wealth managers need to have this basic market data, basic news, some research, but for the most part Yahoo Finance, Google Finance and media solutions such as MarketWatch and WSJ.com offer enough of this.  Perhaps rather than trying to sell pricey market data solutions into this sector, these large financial technology firms will realize that building relationship tools are probably a better way to go.

Look at some of the companies that are offering relationship tools: RedTail CRM, GaleForce Solutions, Forefield, AdviceAmerica (recently acquired by FiServ), Smarsh, Lightport and others.  These companies have recognized quite competently that relationship tools, perhaps originating from CRM platforms are the next generation wealth management desktops.    I would imagine that we will see many more deals such as AdviceAmerica on the horizon shortly.  I would also imagine that companies that offer social media communication and compliance tools to also be a nice value for some of these large fintech companies.  It seems as though FiServ has recognized this most recently with its purchase of AdviceAmerica.

http://www.galeforcesolutions.com

http://www.forefield.com

http://www.adviceamerica.com

http://www.fiserv.com

http://www.redtailtechnology.com

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