once tried to merge investing and shopping. In 1981, Sears
acquired Dean Witter Reynolds. Their new offering was derided
as ‘socks and stocks.’ Sears bailed on the idea in the early 1990s.”
Echoing Iskowitz, Marshall said: “In some ways Amazon
has already entered into financial services through the work-
ing capital loans that they offer to sellers” — a program that
“has been very successful for Amazon lending over $1 billion
to around 14,000 sellers in 2019 alone.”
Meanwhile, “there have been rumors for the past 18 months
that Amazon was exploring a banking charter which would
allow for deposit taking,” he also pointed out.
Additionally, Marshall said, Amazon, through its AWS division, is already serving as “the infrastructure for many financial firms — most notably CapitalOne.”
Jeff Berman can be reached at email@example.com.
What BD Execs Think of Amazon’s Impact on Advisors
In Investment Advisor’s Broker-Dealers of the Year roundtable discussion in 2019, we asked four broker-dealer leaders: What’s yourview of challenges tied to Amazon’s impact on the business worldand investors’ rising expectations about quick, high-quality digital-based service? Their responses remain instructive and relevant.
David Stringer, Prospera Financial: You can’t ignore
the technology advancements that are happening.
You’ve got to embrace them ... and move forward
with them. But there are some basic things that just
stay — like having a clear value proposition. We’re building our firm
like a good advisor builds their practice, with a clear value proposi-
tion, scalable business processes and a great client experience.
We just have people who value that experience, and we havenot found that we’re behind the curve on technology — becausewe stay in the business; we participate. We understand whatpeople are doing out there, some of the changes that are taking place and are trying to advance the ball with all that. But wealso try to stick to our knitting. We’re a boutique firm, and we’retrying to be the best boutique firm we can be and are not tryingto compete on scale.
And with compression going on, you’ve got to have moreassets to make the same amount of money. That to me is adriver for how you build a scalable business, whether you’re atthe advisor level or at firm level; it’s working for us.
Amy Webber, Cambridge Investment Research:
You start with your value proposition, and ours is
client experience, an intimate client experience.
The trick for us has been scale and maintaining
that client experience, as it is still in demand. And that’s where
the technology comes into play. It allows us ... to take control of
that ourselves and to partner with some entrepreneurial tech-
nology firms, but a lot of it is ours.
We have a situation right now where our end-to-end digitization, along with client experience, means we believe in being fullydigital end to end. Ultimately, we need to get to this, because weneed to compete and to be able to compete on price, as well.
Really this is all about the advisors. They have to compete —and they need more from us for less [cost] now, so they canreally go out and compete in the market.
Lon Dolber, American Portfolios Financial
Services: We decided to eliminate as many hands
as there can be in our pocket. We went to the advi-
sors and said, “We can integrate something that
has all the bells and whistles [others] charge you for. What if
we could give you the basic platform, which means you could
put five money managers into one account? Is that enough? We
could do it and not charge you, because we recognize that to
help the advisors scale, we’ve got to bring our costs down.”
We decided to do that by building a platform. This end-to-end
solution is going to be important … for the public and for the
advisors, so they can open up accounts quicker, easier and in a
more digital fashion.
What about the future? What if you went directly to a network of relationships? To do that, you need to have an end-to-end solution that somebody could point to, that a network couldpoint to. I see that down the road. You start by building thatindex solution for your existing customers, who are financial-service professionals, so they can open up accounts quicker andmore efficiently. To me, having an end-to-end solution is veryimportant; we’re building it internally now.
Ralph DeVito, The Investment Center: How do youbalance the group [of advisors] you bring in to discusstechnology at your firm?
We have an advisory council of forward-thinking
folks. Everyone says, “We need ‘this.’” You can spend all this money
to build “this,” but then you may find that almost no one buys it.
That said, we look at this as a whole plan with everythingbeing integrated, and it’s coming together. What we’re findingis that we have to teach each registered rep or staff member ata regional office one on one; by doing that, they learn to adaptand get into that [innovative] mindset.
Stringer: We look at [our advisors] through the [tech] adoptionbell curve. We’ve got an early adopter group, roughly 10% orabout 10–15 of our advisors.
We’re a small firm, so we have to be nimble and quick. Still, itlooks like some of this is taking off; we get [new tech] adoptedpretty quickly. But we’re not going to do the experiments,though the bigger firms can. —Janet Levaux & Ginger Szala