Kelley Byrnes

About Kelley Byrnes

Kelley Byrnes is an analyst with Celent's Wealth Management practice and is based in the firm’s New York office.

Kelley has worked on strategic planning for advisor facing technology and on fixed income trading desks. Kelley also has experience is sales and partnerships, driving channel strategy, regulation and technical projects for financial institutions.

Prior to joining Celent, Kelley was a director at Barclay Investments. She also held positions at Bank of America Merrill Lynch, as an assistant vice president in the wealth management practice and as an analyst on the fixed income institutional sales desk.

Kelley received her MBA from the McCombs School of Business at the University of Texas – Austin and her BA from Washington University in St. Louis.

Wealth and Asset Management Converges on Celent’s Annual Innovation and Insight Day

Wealth and Asset Management Converges on Celent’s Annual Innovation and Insight Day

This will be the first year that Wealth and Asset Management (WAM) will have its own stream at Celent’s annual Innovation and Insight (I&I) Day. Traditionally, I&I Day has been focused on insurance and banking, and is an opportunity for insurers and banks to demonstrate innovative projects with the chance to be recognized for outstanding capabilities. Typically, each insurer or bank begins preparing months in advance by submitting their case for how they have exceled in a particular sector. For example, in banking, awards are given for innovation in payments, lending, open banking, and product innovation.

As this is the Wealth and Asset Management debut, the organization of the day will be slightly different but no less exciting. WAM attendees will have the chance to hear topical discussions and engage in healthy debate around ideas that are driving innovation in the wealth and asset management sectors. Attendees of the WAM stream will also be able to interact with insurers and banking at designated times throughout the day, creating a truly collaborative and dynamic environment.

A preview of the WAM day:

Senior Vice President David Easthope will discuss Top Wealth and Asset Management IT and Business Trends. Ashley Globerman will share how wealth management firms have modernized legacy platforms to keep up with robo advisors and to serve the millennial generation.  Will Trout will explore the degree to which artificial intelligence (AI) represents a logical next step in the development of automated advice, helping to scale asset management functions and the thinking and reach of the human advisor. I will be joined by Arin Ray to discuss how wealth managers are using natural language processing and natural language generation technology to enhance their value and improve customer satisfaction. Arin will also share how AI tools are improving efficiencies in operational risk and compliance functions, such as KYC and AML. 

Jay Wolstenholme and Will Trout will explore the intersection of Wealth Management and Asset Management. They will cover a lot of ground, sharing anecdotes of how wealth managers are adopting trading platforms and advanced technology once common to only asset managers.  Later, Jay will explore the opportunities of $100 trillion in global assets. How can asset managers and asset owners prosper in this environment using automation and analytics? Brad Bailey will follow Jay’s discussion with an equally compelling conversation on how asset management trading desks are loading up with analytics and technology to execute across an increasingly complex cross-asset market structure. The WAM Stream will end with a lively interactive panel discussion of the edge disruptors in WAM(AI, robotics, big data, analytics … you name it!).

 

The Virtual Agent: NLP in Wealth Management

The Virtual Agent: NLP in Wealth Management

NLP has many use cases in consumer banking and is gaining adoption in wealth management. In my report, The Virtual Agent: Natural Language Processing in Wealth Management, I look at some of the more popular use cases for NLP, including for chatbots/virtual assistants and biometric identification, as well as the more cutting-edge applications, like for advisor matching and more complex virtual assistant processes.

IPSoft and Personetics are two vendors making huge strides in the field of NLP.  IPSoft is working with SEB and Personetics is working with BRD, a subsidiary of Groupe Société Générale, to explore innovative use cases for NLP.

Enterprises looking to explore NLP should consider whether a solution has a process ontology that builds best practices, works across multiple languages, detects formality, and perceives when a human should get involved.  Best practices should be tested on internal use cases before applying NLP technology to external-facing problems.

In the next 12 months, it is likely we will see many of the largest consumer banks that already have a virtual assistant rolling out new uses cases for their virtual assistants within both their consumer banking and wealth management arms. Other banks that do not yet have a virtual assistant or chatbot offering will be racing to catch up.

Ellevest Knows Their Customer

Ellevest Knows Their Customer

At the end of last year, I decided to try Ellevest, an automated advisory platform that specializes in serving women’s distinct needs.

Ellevest’s email communication and marketing have stood out to me. Ellevest understands their audience.  The emails sent by Sallie Krawcheck, cofounder and chief executive, resonate with my beliefs. Her communication strikes the right balance of sensitivity to women’s issues, responsiveness to current events, and emphasis on the importance of financial goals/investing, while also coming across in the same organic language one would use with their best friends. Emails from other Ellevest team members are equally relatable and informative.

I even received beautiful flowers in the mail around the New Year from Ellevest. The flowers were delivered by Bouqs, a company that delivers farm to table flowers and is a provider that I personally use frequently, so this gesture was on point. 

The passive investment platform is much like the others. However, the infographics are nice and the user interface is more attractive than competitors.

While I wouldn’t be surprised if Ellevest expands beyond its focus on women (though I have not heard anything to support this), I am confident Ellevest understands its consumer base and will continue to reach out and serve women uniquely.

Impact Investing Gains Momentum

Impact Investing Gains Momentum

The polarizing political climate appears to be serving as an impetus for some firms to take socially responsible investing more seriously.  At today’s Impact Investing conference hosted by The Economist in NYC, Audrey Choi, Chief Executive of Morgan Stanley’s Institute for Sustainable Investing, said there is research that shows that 70% of investors want to align their investments with their values.

Not surprisingly millennials are interested in impact investing. Audrey Choi also referenced research that that millennials are two times as likely to buy or divest stocks based on their personal beliefs.

Most speakers throughout the day were aligned in that they wanted to see impact investing become more than just a sleeve of an investor’s portfolio; impact investing should be mainstream as suggested by the full name of the conference, “Impact Investing: Mainstreaming purpose driven finance.”  Jackie VanderBurg, Managing Director and Investment Strategist of US Trust and co-author of “Gender Lens Investing: Uncovering Opportunities for Growth, Returns and Impact,” explained that gender lens investing, like other responsible investing should not operate in a silo.

Another common theme throughout the conference was that impact investing is smart investing. Understanding sustainability and opening one’s eyes to the different geo-political risks that face our world, is wise and exposes a company to less risk. For example, Audrey Choi, shared a statistic from the Sustainability Accounting Standards Board (SASB), which found that 93% of companies stand to be impacted by climate change or the need to defend against it, but only 12% of companies are disclosing the risk.

A roadblock in the world of socially responsible investing is proving to investors that they do not have to compromise return when investing according to their beliefs.  As Jackie VanderBurg said in reference to gender lens investing, “Gender lens investing is not small, soft and pink. It is smart investing. Gender lens investing is the deliberate, intentional integration of gender-based data into financial analysis with the expectation of finding additional opportunities and mitigating risk”.  Money managers and personal investors must apply the same rigorous process to impact investments as they would with any type of investment. 

Joshua Levin, co-founder and Chief Strategy Officer of OpenInvest, a robo-advisory that permits clients to choose investments supported by their personal beliefs, brought up another challenge: intermediaries. He gave the example that when people first started out investing, people invested to have an impact; that impact may have been to start a factory or own part of a company to influence a company’s decisions. Now with so many intermediaries, investors no longer think of investments as having an impact. Now people invest for diversification.  With a platform like OpenInvest, people can have an impact by choosing not to invest in a company if the company is not aligned with their personal beliefs. 

Many speakers were also in agreement on other challenges facing impact investing: reliable metrics, more products across asset classes, and more education for consumers and advisors alike.  After attending this conference, I am hopeful that firms are working to address the roadblocks to impact investing. While perfect solutions may not be possible this should not impede the value that can be added from investing in a socially responsible way.

Technology, Training & Compliance in Light of the Fiduciary Standard

Technology, Training & Compliance in Light of the Fiduciary Standard
Capturing retirement assets is paramount for brokerages. When thinking about the word saving, it is hard not to think about retirement.  Brokerages are constantly looking for rollover assets, and as baby boomers retire, this search has never been more significant — which is why, when the DoL Fiduciary Rule was proposed, brokerages quickly reacted.

  April 10, 2017, when Phase 1 of the DoL Fiduciary Rule goes into effect, is quickly approaching.

  My latest report, The Quest for Retirement Assets: When the Light Shines on the Fiduciary Standard, explores ways that brokerages are reacting to the DoL rule. Brokerages continue to rethink their operating model. Brokerages are questioning their existing technology: Can it support a new business model? How should training be embedded and amended to support compliance with the DoL Rule? In my report I lay out some of the challenges facing brokerages, as well as best practices for compliance and training.   Regardless of whether the DoL rule is delayed, changed, or repealed, advisors need to know how to clearly communicate their offering to clients as it relates to the fiduciary standard. Investors are more aware than ever of the fiduciary standard. Even if the DoL relaxes its stance, there is no doubt that investors will continue to pressure advisors to act as fiduciaries. It won’t be long before clients ask for proof that portfolio transactions and ideas are made in their best interest.  

Motivations behind Outsourcing in Wealth Management

Motivations behind Outsourcing in Wealth Management

This year Celent surveyed technology providers that service wealth management firms. The goal of the survey was to learn the motivations and strategies of wealth management firms that outsource components of their business to third party vendors.  The last time we did this survey was five years ago.

From the survey, we learned that one of the main drivers of outsourcing today is so wealth managers can experiment with the latest technology before committing vast resources to a technology that may only be a fad.  Similarly, wealth management firms are eager to outsource because it allows them to scale up or down their operation, or enter new regions, quickly and efficiently.  Wealth managers prefer to work with a technology provider to test ideas, tools and regions, before building a permanent team and spending on fixed costs.

Several motivations to outsource have become more important today than they were five years ago. These motivations include: to improve efficiency, to enrich the customer experience, and to respond to regulation.  Over the last five years, across the world we have seen a push for more stringent regulation.  Therefore, it is not surprising that regulation is top of mind for most wealth managers.

As products and services are increasingly commoditized, it is important for wealth managers to distinguish themselves via the customer experience. It is likely that over the next 12 to 18 months, wealth managers will spend relatively more time on outsourcing front office operations. For example, firms may look to vendors for improvements in: the onboarding experience, components of the advice and planning process, and help desk services.

For more information on the global outsourcing landscape in wealth management, please see my report, Outsourcing in Wealth Management: The Drivers and Strategies.

Coaching the Advisor: Predictive Analytics and NLG

Coaching the Advisor: Predictive Analytics and NLG

Predictive analytics and natural language generation (NLG) are used throughout the financial services today, but are used less frequently in the case of wealth management. Narrative Science and Yseop are two of the few NLG companies currently selling to wealth managers.  IBM Customer Insight is bringing its cognitive Watson technology to the wealth management industry.  IBM Customer Insight is doing cool things related to behavioral segmentation, encouraging wealth managers to create more robust customer profiles by casting their data net beyond customer income information. More in my blog post here.

There are many use cases for NLG and predictive analytics in wealth management.  For example, predictive analytics can assist with risk management by spotting anomalies in real-time, and therefore, enable advisors to resolve issues faster. NLG can be used to transpose customer data into a short narrative that summarizes a client’s performance.  This narrative could be shared in an email to the client or used by an advisor preparing for an in-person client meeting. 

In my report, Coaching the Advisor: Predictive Analytics and NLG in Wealth Management, I focus on how predictive analytics and NLG solutions can enhance advisor-client relationships, the attributes of competitive analytic solutions, and propose best practices for the modern advisor. I stress the importance of advisors’ establishing genuine connections with their clients in the midst of adopting new analytic tools.

In the next 12 to 18 months, I anticipate wider adoption of these tools in the wealth management industry.

Finally, Behavioral Segmentation for Wealth Management

Finally, Behavioral Segmentation for Wealth Management

Yesterday’s IBM Forum for Financial Services showed Watson’s capabilities for wealth management, insurance and banking. The forum coincided with the 2.0 release for Watson’s application in financial services.  

The demo session emphasized Watson’s behavioral segmentation capabilities.  The psychographic measures delivered by IBM Customer Insight are impressive.  For example, measures include but are not limited to: openness, liberalism, cautiousness and sympathy.  Knowing all too well that a client’s personality can make them candidates for different products than what a client’s paper profile would suggest, it is easy to see how in the wealth management space, advisors could use these measures to build deeper human connections with their clients. 

I was also impressed by the fact that Watson shows financial advisors the reasoning behind the machine learning results.  Gaining insights into how Watson arrives at its recommendations empowers advisors to validate the results or add human refinement based on inputs not available to Watson.  In this way Watson can complement the financial advisor. 

It seems that there is even more that IBM is working on that is not in this latest release, so I’m looking forward to what more there is to come.

FinovateFall 2016, NYC: Day 2

FinovateFall 2016, NYC: Day 2

Below is a selection of companies, which demonstrated solutions that can be used in the wealth management space. The Best in Show awards went to: 1) AutoGravity, 2) Backbase (mentioned in my blog post yesterday, FinovateFall 2016, NYC: Day 1), 3) Clinc (profiled below), 4) MX, 5) Swych and 6) Trusona

Envestnet│Yodlee:

Envestnet│Yodlee presented their dynamic intelligence solution. Envestnet│Yodlee walked through an example with a fictional user, Amanda, a 29 year old with $85,000 in student debt. Amanda just received a $15,000 signing bonus.  A chatbot alerts Amanda of the new deposit and provides Amanda with three ways to use the cash: 1) pay down her credit card debt, 2) use the money for emergency savings, or 3) pay down her student loans.

Envestnet│Yodlee has data on 22 million customers in 15 countries. As such, Envestnet│Yodlee has looked at data across all of Amanda’s financial institutions and has data that shows Amanda has stopped contributing to her prior’s employer’s 401(k).  Therefore, Envestnet│Yodlee infers that the $15,000 is not a recurring deposit.

The chatbot offers Amanda detailed information on each of the three suggestions listed above. The chatbot uses Amanda’s financial information and best financial practices to offer additional information on each of the three recommendations. For example, when Amanda asks for additional insight on putting the money away in an emergency account, the chatbot provides information on how much money Amanda needs to cover one, three, or six months of spending based on her habits. 

IBM Customer Insight:

IBM Customer Insight, the second IBM product to be demonstrated at FInovate, is a dedicated cloud system.  It provides cognitive insights derived from third-party sources, customer transactional and behavioral data.

The Finovate demonstration showed what a regional manager at a bank would see when using IBM Customer Insight. The fictional regional manager, Harry can use IBM Customer Insight to predict customer attrition, mortgage churn, overdraft, and large deposits. Also, Harry can use IBM’s system to study the sum of a customer’s life events. Harry can look at one life event, such as a relocation to get information on other possible life events, like purchasing a home or retirement.

M1 Finance:

M1 Finance, a portfolio management tool, announced their public launch at FinovateFall 2016.  Their product allows users to create, organize and automate their investment portfolios.  An individual can choose to create a default M1 portfolio or create their own portfolio. M1Finance has three default portfolios: 1) Savings, 2) General, and 3) Retirement.  The portfolios are all displayed graphically as a pie chart.

In the presentation, the M1 Finance Savings portfolio was selected.  A user can then choose to edit the savings portfolio investments.  For example, a user can search the investments in the savings portfolio for FANG stocks (Facebook, Amazon, Netflix, and Google) and opt to group those stocks together.  The user can track this FANG group separately and even choose to increase the weighting of the FANG stocks.  Every slice of the pie is a visual representation. For example, if the perimeter of the FANG stocks are not be in line with the rest of the pie’s perimeter it indicates the FANG weighting is over/under target allocation.

M1 Finance is available on the web, android and iOS.  In the presentation, M1 Finance said they do not charge rebalancing commissions.

Qumram:

Qumram demonstrated how “digital business and compliance can co-exist.”  Qumram records every digital interaction, plays them in movie form, and stores the videos for as long as is required by regulation.  Currently the product is used by UBS globally.

In today’s demonstration, the Finovate audience witnessed an interaction between an advisor and a client on WhatsApp. The fictional client was Patrick, who wants to invest $30,000.  After the advisor’s conversation with Patrick concludes, the conversation is recorded and automatically categorized with the client’s name, advisor’s name and products mentioned, e.g., LinkedIn (LNKD). 

Clinc:

Clinc is another dynamic intelligence solution.  The application responds to conversational language. For example, in today’s demonstration, the demonstrator said, “I am thinking of getting something to eat after Finovate in NYC. Can I afford $150 on dinner?”  The application responded with the user’s monthly average spending on eating out.  The application also added that if the user were to spend $150 on dinner tonight that the user would still be 10% below their average monthly spend. Additionally, with the use of the Clinc app the user can move some money between accounts.

FIS:

FIS discussed their new card-less cash technology. The FIS presenter showed that an individual can retrieve cash from an ATM without inserting a card.  A user can save their preferences on their mobile device. For example, if a user usually takes out $40 at a time, then that preference can be saved. When at an ATM, the user can select card-less cash as an option. The user then scans the QR code on their mobile device. 

FIS also showed that when a user approaches an ATM that is behind a locked door, the user can open the door with their mobile device. Lastly, FIS demonstrated that with their technology allows a user to send money via Amazon’s Alexa. The demonstration closed with a video of the individual in India collecting the money from an ATM located in India. 

With the addition of FIS’ latest partnership there will be 100,000 ATMs with card-less cash optionality.  Additionally, card-less cash works at participating grocery stores, convenience stores and pharmacies.

 

 

 

FinovateFall 2016, NYC: Day 1

FinovateFall 2016, NYC: Day 1

This is my first year attending a Finovate conference. This year many of the companies claim to solve one of two problems: fraud or lengthy existing processes to comply with AML/KYC laws.  Additionally, there are several companies that facilitate collaboration and co-browsing between representative and consumer, or in the case of wealth management, advisor and client.

Below are companies that have products that touch – some more closely than others – the wealth management space:

Trulioo, one of the verification companies, was memorable for the fictional characters used, “Ryan Lochte” and “Michael Phelps”.  Michael Phelps checked out when Trulio selected six of his credentials to validate out of over 200 possible data sources that could be used to verify users.  Ryan Lochte did not check out when the same process was used. The presenter joked that Ryan may not be able to open an account with a Brazilian start-up. Trulioo stressed its ability to work in over 50 countries and as such, highlighted that it would be a good vendor for companies looking to expand globally.

In the Backbase presentation, the presenter proved to the audience that it is possible to set up a personal checking account in 60 seconds.  Backbase features include: conversational style dialogue to get initial customer details, social security numbers are automatically verified, and official documentation (passport, state ID)  and credit card information can be uploaded with a mobile camera.  Backbase’s customers include Goldman Sachs and ABN Amro.

TokBox and Salemove facilitate collaboration and co-browsing across platforms. Both companies focus on the fact that customers prefer to see the person they are engaging with online (Proof there is another person answering your questions!)  For example, when co-browsing using Tokbox, an advisor can share content with their client, can annotate on the shared screen, and then save the screen to send to their client later.  In addition to co-browsing, Tokbox features include: two-factor authentication, secure recording, and multi-party calls.  

SaleMove allows advisors to login through a portal on a website.  In the case of wealth management, it is designed to run on top of a wealth management firm’s or RIA’s website.  The wealth management firm or RIA can create the business rules for when a customer engages with the website.  For example, if a client that has previously engaged logs on, SaleMove can direct that customer to the same advisor that previously answered the customer’s chat request. Business rules can also be created so an out of office message picks up.

Personetics’ product is a “savings coach” that helps consumers with short-term goals and retirement.  It is a predictive analytics solution with a chatbot.  While it is a consumer banking product now, it is possible to envision it being used in the wealth management space as an add-on tool designed for mass market, mass affluent and/or HNW clients.   The Finovate presenter gave an example of a customer about to go out to eat and the chatbot alerts the customer that they have been spending a lot on restaurants. Or a customer can ask a general question, like “Can I afford this?” Typically the chatbot will ask how much it costs then the user inputs the price. The chatbot will inform the customer how many months of cash-flow are needed to afford the purchase. The user can also check in regularly with the chatbot to see how much they have saved for a specific goal. Lastly, The Personetics presenter mentioned that the product collects feedback while in interaction. For example, the Personetics chatbot will ask the customer if the chatbot is helpful and the customer can respond “Yes”, “Meh” or “Stop sending me these”.   

More to come from Day 2 tomorrow…