Video Quick Take: Advisor360°’s Jed Maczuba on the Digital Transformation of Wealth Management

Todd Pruzan, HBR

Jed, digital transformation is really a necessary part of any business model. How are your customers thinking about digital transformation these days?

Jed Maczuba, Chief Technology Officer

That’s a great question, Todd. I don’t think anybody can argue against the importance of digital transformation to a business these days. So we all know that that’s important. Advisor360° recently completed a survey of the wealth management industry. And the research came back clear. Subpar technology costs advisors business.

And in our survey results, 65% of advisors have reportedly lost business because their tech let them down. Advisors in the wealth management space see technology as an extension of their practice. So newer capabilities and innovations really have a significant impact on how they engage with their clients, how they establish relationships, and sustain those relationships over time.

So while the survey was focused on the industry, there’s no doubt that these results really do reflect a greater sentiment around the importance of technology. The challenge companies face, as you mentioned, is really being successful with these transformation efforts between legacy platforms, legacy processes combined with trying to run the business during the transformation, the immense choices of technology, the resource war around talent. It really is becoming a seemingly intractable problem for companies to deal with.

Todd Pruzan, HBR

It does sound like a lot to deal with. You mentioned that achieving a successful digital transformation is tough. How can a company think about how to proceed on that path to increase the odds that it’s going to succeed?

Jed Maczuba, Chief Technology Officer

Well, that’s the million-dollar question, Todd. And that’s one, certainly, I think about a lot and my clients think about a lot. And there’s lots of guidance around how to position yourself for success and how to identify risks and mitigate those along the way. But for me, it really starts with a matter of choice, a choice on the solution, whether you’re going to build, buy, or integrate in order to deliver the business value that you want to achieve.

So let’s break it down a little bit. If you’re going to buy a solution from a third party, you need to consider how well your vendor understands your business and what you’re trying to achieve. So this is the difference between horizontal and vertical SaaS companies. The case for the vertical SaaS company is that industries have nuances that need to be understood.

For example, in my industry, we have to not only understand how the broker-dealer, advisor-client relationships work, but also understand the regulatory environment in which they operate. So regardless of the SaaS model, the important thing is to ensure that the vendor understands what it takes to build and support enterprise-class software. So looking at things like product roadmaps, R&D spend, how they support your client-specific enhancements or configurations are all questions to be asked.

And if you look at the second choice around integrate, which is really about bringing together best-of-breed solutions, you need to consider both the end user experience and the data aspects of that integration. Solving the swivel chair problem is really not just about solving the problem at the glass. Having many disparate systems and ultimately disparate data underneath that really can actually erode the productivity of the users in making — and can make an organization’s situation way worse in the long run.

So if you decide that build is your path, the third option, well, that’s sort of a different topic altogether.

Todd Pruzan, HBR

A different topic, indeed. If companies might choose to do a combination of build, buy, and integrate, how does Advisor360° think about building software?

Jed Maczuba, Chief Technology Officer

Beings a software company, we pride ourselves on good engineering practices and the nuts and bolts of producing code. But I’m also really encouraged by low-code solutions these days.

Whether for ourselves, as a software company, or for our clients as they look to do some aspects of build, I think low-code solutions actually provide some opportunity. They’re not totally new, but really recent advances in the space have really brought them to light as an opportunity to help with some of the build challenges that we have.

Let me give you a specific example of one of the more difficult problems in the wealth management space, and that’s account opening or digital onboarding, which is really about how you bring clients of advisors and their assets and accounts online, and the objective is to make it a streamlined, straight-through, completely digital experience. Getting rid of the pen, paper, and wet signatures, this screams digital transformation.

In developing our digital onboarding solution, my team chose to focus on a low-code development approach. In this approach, inputs are gathered in a business-friendly format by our product owners. And that’s used to generate the code — everything from the user interface to the business rules that control the screen flow to the elements that are on the screen to the validation that occurs. The team wanted an architecture that really reduced the burden on the engineering resources and made something that was more responsive to changes, which happens a lot in the space, and supports client-specific configurations which our customers require.

The architecture that we put in place puts more responsibility in the hands of the business, and in our case the product owners, which helps accelerates development. Our feeling about the long term, with an approach like this, maintenance and support of the application are expected to be significantly lower, and really more flexible than if we follow traditional development techniques. We actually go in through the system development lifecycle and get engineers involved to make coding changes.

This isn’t to say that low code is a panacea to all of the problems, but companies should really understand where their strengths lie and focus on those. I think low-code solutions do provide an opportunity to achieve what you’re looking to do.

Todd Pruzan, HBR

That approach definitely sounds like it makes a lot of sense. Thank you. Jed, any last thoughts on digital transformation?

Jed Maczuba, Chief Technology Officer

Digital transformation, as we stated, it’s difficult. It’s more than just execution. It’s really around making fundamental choices at the beginning, picking the right partner, picking the right approach to how you want to solve the problem and ensuring that your partner or you have the sound engineering practices to make it real and to be successful with it.

At the end of the day, transformation is not a transaction. The choices that you make actually have a long tail, way beyond just the implementation timeline. Ongoing support and maintenance for software is a factor greater than the original costs. So I’d like to conclude with that, Todd.