FinTech vs FinTalk
I marvel at the brilliance and passion of inventors. Today’s FinTech pioneers have that stuff and challenge convention with ideas that shame our legacy systems. These geniuses cannot understand why clunky incumbent “tech” persists when better ideas are here for the taking.
And yet most of the inventions never get commercial traction. Demos aplenty and lots of “great meetings” raise hopes that slowly drain away. A sort of “innovation expiration” sets in as the effort loses momentum - and funding - and the innovators retreat to ponder their next move.
Don’t Leave - We NEED You!
We just don’t know it most of the time.
I’ve seen five different causes of the disconnect between much needed innovation and actual success. They are all related and therefore can be either be the spark of rejection or the nail in the coffin of failure.
Numbers - Houston, We Have a Proliferation Problem
@MichaelKitces and team are just brilliant. One of their first great works was the now widely known FinTech Industry placemat of capabilities - all on one page. Innovation has forced some font size shrinkage but that single sheet still captures the landscape. And what a roster it is:
- 186 capabilities in 29 categories
- 24 portfolio reporting applications
- 14 financial planning packages
Daunting.
By comparison, there are a lot of stocks and many more bonds but their world is simplified into S&P’s 11 sectors and the bond world’s 14.
Consumer products are more disciplined - consider the five categories of toothpaste. Even cars sport only 12 categories according to JD Power (though mechanics claim 20 - innovators are everywhere).
I know some CIOs at big companies. They cannot begin to understand the number of offerings. But most also fail to investigate. Do they have active efforts going to find new ideas? More on that in a minute.
Priorities - If Everything is Important, Nothing’s Important
A recent report from a top consulting firm outlines the top most important trends in tech for 2022: 14!
I’ve been in a lot of strategic planning sessions over the years and I’ve not yet seen or given a presentation about 14 trends. And I’ve never seen any successful corporate plan with so many objectives. I know that’s not the point of the work but who and how and where do executive teams find their target?
Corporate focus is a process - it has to have an objective easily conveyed to the full team but also must emerge from the company’s capabilities and values and existing foundation of success. A true company success is a build - not of an entirely new house on raw land but rather improvements to an existing structure.
Don’t view that foundation as a constraint, view it as the solid base on which to grow. Call that a Kodak moment - since Kodak had it and lost it.
Breaking Through - The Pursuit of Acceptance
Another top consulting executive was asked recently about InsurTech and brilliantly observed that most die on the runway having spent most of their venture backing on buying awareness they hope will translate into acceptance. He laments the spend of up to 80% on promotional web search. “The only people making money on that innovation are Facebook and Google”. Wow.
He went on to say the industry needs to work harder to identify emerging technologies and the entrepreneurs behind those innovations. Allianz is one of the firms that has stepped up - creating their Onramp Insurance Accelerator with Securian as well as making investments in capabilities such as LifeYield.
ROI - Why Should I Buy?
This one is on the FinTech firms. Without a clear connection to the buying firm’s bottom line, I cannot imagine any real company writing a real check. And I’ve sat in that chair.
A burden carried by many (most?) FinTechies is that they are unapologetically Techies. But the buyers are business people too often of a totally different background, orientation and personal motivation. One of the most entertaining moments in corporate life is gathering the senior team with a FinTech innovator team and watching the awkward proceedings. Nothing in common - even the lunch selections can be odd as they reinforce the differences.
Integration - Don’t Be an Island, Join an EcoSystem
No company is buying any application for an open hole. There is something there already and it is connected to a bunch of other stuff. None of it might be good. Some of it could be - but you don’t know. And you don’t know what they know or think. Connectivity is all that matters and the ability to connect is as important as the capability. Don’t be the only grounded three prong plug in a workshop full of two prong outlets.
How do you connect??
Adoption - A Problem of Design
My favorite for last. This element is owned jointly by buyer and seller of FinTech capabilities.
First we pick on the seller - did you design your product to be excellent or to intuitively and naturally solve a problem? The sale of “better” is a lot more difficult than “easier”. Most adoption of everything is a function of greater ease along with improved results - so adoption is a function of the DESIGN. The owner’s manual is history - don’t force it on an already busy FinServ.
But don’t walk away Buyer. How many enterprise software purchases have failed to attach a full budget for training and integration?? “We can figure it out and save…” is one of the most devious enemies of corporate success. A race car in the hands of a driver who can’t drive is a …. stupid waste of money. But you get to say you own one….I guess…. IT procurement checks a box and gets to blame the business for failure to drive.
So with admonitions to all sides of the FinTech movement - let’s all just get along and start working together. The upside is worth the effort.
Give me call - we can help.
The Client is Not Always Right
It was one of those “Hello McFly” moments (if you remember the iconic line from Back to the Future with Michael J. Fox). On stage at a national retirement income industry summit featuring brilliant scholars and company CEOs. A panel of confident, self-directed investors said they felt they didn’t need any help (this is before the recent 20% sell off, BTW). “I feel like advisors are trying to sell me something”, each of them remarked. The line of the day came from a top advisor with an insurance company parent that started off replying, “If you feel like you are being sold something, maybe you need something!” Drop the mic – a subdued chuckle rolled through the room.
Perspective is Personal, and Preparedness is a Preference
I’m fortunate to work a lot with the Alliance for Lifetime Income (protectedincome.org), a not-for-profit group dedicated to championing retirement income – supported and funded by 24 of the biggest companies in financial services and retirement. The summit organized by ALI and roundly attended by industry leaders sought to expose all perspectives. The confident over-confidence of investors sounds familiar to those of us who have been around for awhile. If you’ve lost 50% of your account value in a “correction”, you have perspective. That would be most Baby Boomers – the dominant client cohort today and for the forseeable future. The Alliance and its educational arm, the Retirement Income Institute, keep tabs on consumer views with terrific studies like the most recent work, Protected Income and Planning Study with @Cannex - https://www.protectedincome.org/news/in-the-face-of-a-potential-recession-americans-feel-unprepared-for-retirement-and-are-looking-for-protection/
The work of the ALI and the RII shows that people do know better – and they are learning more every day about how little they know.
Welcome to the Curveballs of Retirement
Navigating retirement is a bit like batting in a baseball game against a wild pitcher. You expect the fastball down the middle – the cost of living, healthcare, et al. You prepare for those pitches. But life sometimes gets in the way of the expected and it’s really hard to prepare for the inevitable curveball – like an illness – or a wild pitch like your only home being wiped out by a hurricane. My 88 year mom was standing tall at the plate for the first 25 years of her retirement. My dad set up four two-life annuities from his universities and had a New York State pension. Mom gets five checks a month since he passed away in 2016 - and can’t spend the income. And then Hurricane Ian blew up her idyllic Sanibel Island world. Safely evacuated by my nearby sister, she is crushed but grateful to also own a share in a continuous care retirement center on the mainland where she can live safely and close to both professional care and longtime friends. She no longer remembers how she fought that idea….
Helping Clients Learn How to Hit the Curve
I continue to fear that most people are not prepared for retirement. That’s a big statement, but understand the perspective. Most people don’t have the cash to survive a protracted retirement. Longevity will suck up their savings. Especially if markets and interest rates don’t cooperate. And especially when big expenses, aka curveballs, are added into the mix. A very interesting interview I conducted recently with a terrific advisor revealed his approach to longevity education and planning. He navigates clients through the regular planning process with Money Guide. He congratulates them and thanks them for their patience. Then he says, “And now we do it again – with the ‘what-ifs’ included”. Time to learn how to hit the curve.
That Wild Pitch Just Might Hit Your Head
More and more smart thinkers are talking about the non-financial issues of retirement, or what my ALI colleague Mike Harris calls, “emotional finance”. Your client might have money for retirement but an undeveloped sense of what you will do in retirement to avoid isolation, boredom, lack of purpose. I see those forces eating away the spirit of friends and relatives. Another great industry colleague, Eric Sutherland of PIMCO rescued his mother from her retirement paradise but she lost her friends as they fled to disparate locations. And don’t try to tell me that pickleball is enough to engage a Type A businessperson at the same level. Silver lining: my aging orthopedist stays young fixing those folks.
Practice Management Pandemonium
The bottom line is that there is now building a slowly moving conveyor belt of pre-retirees, new retirees and wannabe retirees, all in various stages of education, realization and comprehension. Unlike the relative order associated with investing for the future when everyone is equally impacted by markets and news – this lineup is all over the place. If I stretch that baseball analogy, we have an unlimited roster of players (clients) of varying abilities facing an equally prodigious pitching staff firing pitches (life events) of all kinds at all of them at once. And that is now the typical advisor’s practice – a free-for-all of issues and events across multiple generation families scrambling to adapt. You will be tested as never before by the sheer volume of activity. Organization, teamwork, digital support all play a role.
Objective: Be Worthy of Being Consulted
Master the madness. Help people face the curveball and at least deflect its damage. Listen to them explain what happened. Listen more. Ask questions. Only then can you provide some perspective, some education. And then listen some more to reactions. There is plenty of time to suggest actions to prevent but seldom any time to linger over an unexpected head shot. Sooth, calm and balm. The best advisors know these events happen, they know how to handle them and that the most important step is listen well. That’s what defines a great advisor in this crazy land of retirement – a listener who has been there and can project their professionalism through their confidence.