Why advisors must utilise technology to grow book, cut out errors and respond quicker to major downturns
Jon Theuerkauf talks like a man who could skydive, wrestle a shark, rescue children from a burning building and then head home like it’s all in a day’s work.
There's a conviction and aura strengthened by years of experience in financial services around the world at the likes of GE Capital, HSBC, Credit Suisse (six years), Sberbank and BNY Mellon. Through this professional journey, “Jet”, as he is also known, has lived and worked in London, UK, New York City, Moscow, Auckland and Zurich.
From this melting point of cultures – work and life – Theuerkauf is now chief custom officer at Blue Prism, a leading software robotics process automation and AI company, which boasts clients such as BlackRock, HSBC, TD Bank, EY and Fidelity Investments.
He told WP that, for advisors, the era of automation is already here, whether they have their finger on the pulse or not. Time-consuming, back office tasks at large institutions are already being done by bots and he said private wealth managers who embrace this industry-changing technology will benefit from more client face time, less errors and a chance to scale their business.
He takes issue with late-cycle consensus and leans more towards the view that we may be only 50% through this bull run. Either way, a recession will eventually arrive and he believes RPA and AI will have a key role to play if the market crashes, given the speed with which algorithms now affect trading.
He said: “You will be able to see automation tools much quicker rebalance portfolios, so when you see markets moving on a downward trend, you can automatically, if you are in a balanced portfolio, switch into bonds much quicker than you used to. That was all manual before.
“You aren’t going to be able to pick up those trends as fast as an automator or a robotics process will be able to. That’s a positive. I am in some of those type of funds and they rebalance extremely fast with no human involvement whatsoever.
“For the wealth manager, if they have the technology in place to reload and rebalance funds and you’re using it to do that, it’s going to be very beneficial for clients.”
Machine Learning and robo-advisors are already providing online portfolios based on clients' profile, which begs the question of what an advisor can do to provide value and earn that fee? Theuerkauf believes guidance will always be needed, especially for people starting out and for the older generation who may feel uncomfortable using the latest technology.
Within an advisory business, RPA’s heavy lifting ability when it comes to structured data means you can scale your existing workforce better without necessarily having to recruit new people.
Theuerkauf said: “If [an advisor] can only handle 10 accounts because you have all this administrative c*** and you take that away, all of a sudden you don’t have to add people [to scale].
“Those guys get a boatload of money … well, if I can put a few more dollars in my pocket as the CEO by giving that advisor more accounts, I don’t mind paying a percentage on this because if you hire someone new, you have to make all kinds of guarantees. There is a lot of productivity to be gained and you can scale your existing workforce better.”
He highlighted the example of Goldman Sachs, which is using machine-learning engines when a call comes in from a client. It picks up on key words – maybe China, Brazil, markets – and then comes back with different scenarios that the advisor can use.