Wall Street Strikes Back

Brokerage firms such as Merrill Lynch, RBC and Fiduciary Trust are confidently investing in technology and tools to attract and retain high-performing advisers and wealthy clients.

"Because of all the challenges and unknowns [in the markets and the economy], there's never been a better time for clients to need advice from a professional," asserts Craig Gordon, director of RBC Correspondent Services and RBC Advisor Services. "When I think back to 1999, the exact opposite seemed to be true: People were wondering if advice was dead."

Gordon is speaking of the era of the dot-com boom, when new online brokerage firms seemingly were popping up every day and E-Trade was running ads about firing your broker. "The commercials would show a beautiful office and a broker who would say, 'Let's talk about retirement.' But it was his retirement, not the client's," Gordon recalls. "They were mocking financial professionals and the value of their advice. Over the course of the tech boom and bust and over the course of the last year and a half, there's been no other time when the value and need of sound financial advice from professionals was more important. It's a good time to be a professional financial adviser, challenging as it is."

The largest U.S. demographic segment, baby boomers, is approaching retirement, Gordon notes, and in dire need of financial advice during these turbulent times. And although Generations X and Y are more accustomed to serving themselves online, he believes these groups eventually will realize the need for financial advice as well. "It will evolve, just as it has in the last 20 years," Gordon says. "The advice may come in a different fashion -- it may get streamed on Twitter or something. But I wouldn't count out the value of professional financial advisers for many decades."

To keep up with investors' changing needs and to retain experienced financial advisers, many Wall Street firms -- including RBC, Merrill Lynch and Fiduciary Trust -- have been pumping money and programming talent into wealth management technology. "In this current marketplace a lot of financial advisers are going from one place to another," comments Sanjay Bery, director, asset and wealth management, at EMC Consulting. "To retain them you need to give them a bigger bonus as well as the tools that other firms say they provide."

Three areas in which Wall Street firms are directing their wealth management IT resources, according to Bery, are "shadow browsing," which allows the financial adviser to see what a client is seeing online (to help guide the client through the Web site); "client vaulting," which provides secure online sites to which customers and financial advisers can upload documents and view, sign and share them; and customization of the online client user interface, including, in some cases, a chat tool through which clients can communicate with advisers.

Merrill Rebuilds Broker Workstation

This year, despite the market downturn and the firm's resource-consuming merger with Bank of America and all the integration work that entails, Merrill Lynch's wealth management technology group renovated its IT infrastructure for financial advisers and released three new products: Client Review Center 2.0, MyMerrill.com (an enhanced site for clients) and a new asset allocation tool. "Most people on Wall Street are surprised we're innovating at the same time that most firms are simply trying to reduce expense," says Lyle LaMothe, head of U.S. Advisory at Merrill.

EMC Consulting's Bery refers to Merrill Lynch's upgrade of its broker workstation, client Web site and related technology as the largest IT project on Wall Street. One analyst who didn't want to be named calls the new workstation the best in the business.

Although the firm would not divulge numbers, Merrill executives say its expenditure on the brokerage workstation is significant. "We've been heavily investing for years," relates Mark Alexander, managing director, head of technology, operations and Broadcort clearing for global wealth and investment management. "This year we're spending about two-thirds of our technology budget on business-as-usual change and one-third on transition costs. We look at technology as an investment, not as an expense. We may tighten, we may get more efficient around things like sourcing so we can do more with less, but it's the last place we'd go to reduce investment because we see it as our lifeblood."

Since 2002, when Merrill adopted the Thomson One platform for financial advisers, the workstation has been built mostly in-house with some help from vendors and consultants, according to Alexander. Certain applications need to be built in-house because of the tremendous scale Bank of America Merrill Lynch requires, he says. "We always consider build-versus-buy on any significant investment, but often when we look at vendor alternatives they just don't scale appropriately to our business," Alexander explains.