May 2016 Monthly Market And Economic Outlook

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

Continuing the rally that began in mid-February, risk assets posted modest gains in April, helped by more dovish comments from the Federal Reserve and further gains in oil prices. Expectations regarding the pace of additional rate hikes by the Fed have been tempered from where they started the year. Economic data releases were mixed, and while a majority of companies beat earnings expectations, earnings growth has been negative year over year.

The S&P 500 Index gained 0.4% for the month. Energy and materials were by far the strongest performing sectors, returning 8.7% and 5.0% respectively. On the negative side was technology and the more defensive sectors like consumer staples, telecom and utilities. U.S. small and micro-cap companies outpaced large caps during the month, and value continued to outpace growth.

International equity markets outperformed U.S. equity markets in April, helped by further weakness in the U.S. dollar. Developed international markets, led by solid returns from Japan and the Eurozone, outpaced emerging markets. Within emerging markets, strong performance from Brazil was offset by weaker performance in emerging Asia.

The Barclays Aggregate Index return was in line with that of the S&P 500 Index in April. Treasury yields were relatively unchanged, but solid returns from investment grade credit helped the index. High-yield credit spreads continued to contract throughout the month, leading to another month of strong gains for the asset class.

We remain positive on risk assets over the intermediate-term; however, we acknowledge that we are in the later innings of the bull market that began in 2009 and the second half of the business cycle. The worst equity market declines are typically associated with recessions, which are preceded by aggressive central bank tightening or accelerating inflation, factors which are not present today.  While our macro outlook is biased in favor of the positives and a near-term end to the business cycle is not our base case, the risks must not be ignored.

A number of factors we find supportive of the economy and markets over the near term.

Global monetary policy remains accommodative: The Fed’s approach to tightening monetary policy is patient and data dependent.  The Bank of Japan and the ECB have been more aggressive with easing measures in an attempt to support their economies, while China may require additional support.

Stable U.S. growth and tame inflation: U.S. economic growth has been modest but steady. While first quarter growth was muted at an annualized rate of +0.5%, we expect to see a bounce in the second quarter as has been the pattern. Payroll employment growth has been solid and the unemployment rate has fallen to 5.0%. Wage growth has been tepid at best despite the tightening labor market, and reported inflation measures and inflation expectations, while off the lows, remain below the Fed’s target.

U.S. fiscal policy more accommodative: With the new budget, fiscal policy is poised to become modestly accommodative in 2016, helping offset more restrictive monetary policy.

Constructive backdrop for U.S. consumer: The U.S. consumer should see benefits from lower energy prices and a stronger labor market.

However, risks facing the economy and markets remain, including:

Risk of policy mistake: The potential for a policy mistake by the Fed or another major central bank is a concern, and central bank communication will be key. In the U.S. the subsequent path of rates is uncertain and may not be in line with market expectations, which could lead to increased volatility. Negative interest rates are already prevalent in other developed market economies. An event that brings into question central bank credibility could weigh on markets.

Slower global growth: Economic growth outside the U.S. is decidedly weaker, and while China looks to be improving, a significant slowdown remains a concern.

Another downturn in commodity prices: Oil prices have rebounded off of the recent lows and lower energy prices on the whole benefit the consumer; however, another significant leg down in prices could become destabilizing. This could also trigger further weakness in the high yield credit markets, which have recovered since oil bottomed in February.

Presidential Election Uncertainty: The lack of clarity will likely weigh on investors leading up to November’s election. Depending on the rhetoric, certain sectors could be more impacted.

The technical backdrop of the market has improved, as have credit conditions, while the macroeconomic environment leans favorable. Investor sentiment moved from extreme pessimism levels in early 2016 back into more neutral territory. Valuations are at or slightly above historical averages, but we need to see earnings growth reaccelerate. We expect a higher level of volatility as markets assess the impact of slower global growth and actions of policymakers; but our view on risk assets still tilts positive over the near term. Higher volatility has led to attractive pockets of opportunity we can take advantage of as active managers.

Source: Brinker Capital. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Brinker Capital Inc., a Registered Investment Advisor.

Stress Management for Financial Advisors

Crosby_2015Dr. Daniel Crosby, Founder, Nocturne Capital

The dictionary definition of stress is, “a specific response by the body to a stimulus, such as fear or pain, that disturbs or interferes with the normal physiological equilibrium of an organism.” But one can scarcely conceive of a more pointless construct to define than stress, because just as the Supreme Court famously said of smut, you know it when you see it. This is especially true of financial advisors, who inhabit one of the most stressful professional roles in the modern corporate landscape.

shutterstock_247024930Health.com named financial advisors to their list of 10 Careers with High Rates of Depression.” A study titled, “Casualties of Wall Street” found that 23% of advisors surveyed had significant signs of clinical depression while another 36% percent showed mild to moderate symptoms. And a study published in the “Journal of Financial Therapy” found that the vast majority of financial professionals surveyed experience medium to high levels of post-traumatic stress in the wake of the 2008 crisis.

So what’s an advisor to do? Well, the tips for managing of stress are often simple and intuitive. So simple in fact, that they may be overlooked by advisors accustomed to a life filled with risk and complexity. Notwithstanding their simplicity, try the tips below to start feeling better today:

Tame technology – The 24/7 availability of technology such as email has done a great deal to increase the stress level of people everywhere. Having a means of being reached at any time by your clients means that you are in a constant state of heightened readiness. Set limits on your electronic availability by turning off or limiting the times of day when you “plug in.” These periods of electronic disengagement will allow you to connect with others socially, exercise, and pursue hobbies, all of which have been proven to combat stress.

Damsel in Eustress – One common misconception is that stress is always the result of negative events. Recently, an advisor was crying in my office, unable to pinpoint the reason for her feelings of anxiety. As I learned more, she revealed that she was overseeing a number of projects at work, preparing for a wedding, and readying herself for a move. Although each of these things was positive, the cumulative effect of all of this positive change was quite stressful. Remember, the body cannot distinguish “eustress” (literally, good stress) from bad stress, so be sure to take a moment to relax, even when things are going your way.

shutterstock_41447092As a Man Thinketh – Too often, we accept the fact that things just “are” and that we have little control over our lives. Viktor Frankl said it best, “Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and freedom.” The things that happen to you can be as positive or negative as you construe them to be. If you choose to interpret life events in an upbeat and optimistic manner, you will position yourself for success in all areas, and achieve that success with calm confidence. For practice, try and think of five positive things to emerge as a result of the most recent economic volatility (e.g., spent more time with family).

Little Comfort – It is a strange paradox that all of the so-called “comfort foods” have the very opposite of the desired effect on stress levels. Caffeine causes elevations in heart rate and respiration that can mimic a panic attack. Alcohol depresses our mood and impairs decision making, and eating fatty foods provides a brief period of pleasure followed by sustained periods of regret and lethargy. While we understand that an evening run or a healthy meal may be advisable, our short-sighted bodies tell us differently in times of stress or sadness. The next time you are feeling down, let your brain drive your decision-making; your body will thank you later.

Fake Out – Have you ever heard the old saying, “fake it ‘till you make it?” Well, it turns out that science substantiates this pithy phrase. In the past, the conventional psychological wisdom was that we felt a certain way, and then exhibited behaviors that conveyed that emotion. Put simply, “I’m happy, therefore I smile.” What more research has found, is that the opposite is also true – “I smile, therefore I’m happy.” Research subjects who were instructed to smile, regardless of whether or not they were actually happy, saw an increase in mood. This recent evidence suggests that being proactive, maintaining a schedule, and acting happy can start to improve a negative mood. It turns out that, some of the times you feel least like acting upbeat are the times it could benefit you most.

The market is extremely volatile right now, but that doesn’t mean that your life needs to be. 2 to 3% of outperformance achieved by those who work with advisors, is predicated on your being an effective behavioral coach during times of uncertainty. It is only as you take steps to manage stress in your own life that you can effectively model the kind of behavior that most benefits your clients.

Views expressed are for illustrative purposes only. The information was created and supplied by Dr. Daniel Crosby of Nocturne Capital, an unaffiliated third party. Brinker Capital Inc., a Registered Investment Advisor

Tech Talk: Disrupting the Industry

Brendan McConnellBrendan McConnell, Chief Operating Officer

Over the last two years we have seen a tremendous amount of change driven by technology in the financial services industry—an industry that has gone from lagging around technology innovation to one that is very much at the forefront. With change comes disruption, and we are beginning to witness a tremendous amount as wealth management firms adjust to offer technology-driven investor experiences.

One recent disruption that has seemingly dominated headlines is that of the online digital advice firms, perhaps more widely known as the “robo advisor.” In most cases, these platforms provide a lower-cost, time-saving alternative for the average investor complete with a more frictionless experience through the use of technology. These firms have set a new baseline around portfolio management, and traditional advisory firms are reacting.

Charles Schwab, Fidelity and Vanguard are three major institutions now offering, or planning to offer, their own digital wealth platforms. They are making a conscious and deliberate investment to deliver this type of technology to the segment of investors who would prefer less human interaction and faster execution of transactions. These platforms also allow the financial advisor to bring additional scale to their own practices.

At Brinker Capital, we hear concerns from financial advisors on how this new class of investment management is impacting the industry and, more importantly, how it’s impacting them. Suffice it to say that the real impact on the rise of technology in the industry will ultimately be a positive impact for advisors and investors. These new technology innovations are making their way into the hands of financial advisors to in turn offer to their clients. This will lead to a more efficient and productive advisor with the ability to serve a broader audience of consumers looking for financial planning and advice. The future-ready advisor will be one that can offer comprehensive financial planning while maximizing the technology available in the industry.

Technology is changing the way consumers view financial advisors. The services that consumers value most from advisors has certainly started to shift. This has upended the advisor value stack. At a recent Fidelity Investment conference, Sanjiv Mirchandani, President at Fidelity National Financial Clearing and Custody, outlined Fidelity’s vision of the future advisor (images below) with a simple and easy-to-understand visual of the current advisor value stack.

The traditional financial advisor value stack:

Advisor_Value_Stack_Traditional

Source: Sanjiv Mirchandani, Fidelity

Now, technology and investor preference has upended and squeezed the top-end of the value stack:

Advisor_Value_Stack

Source: Sanjiv Mirchandani, Fidelity

What Fidelity is identifying here is that investors are putting greater importance on financial planning and behavioral management when selecting a financial advisor. This is the opportunity for a financial advisor to demonstrate their value and justify their fee over the digital advice offering. Fees are less of a concern with advisors who are following this new value model. The new future-ready architecture is one that supports goal-based financial planning and a digital experience. Advisors who focus on these values seem better positioned to succeed in this evolving landscape. Advisors should focus less on the portfolio management, outsourcing these duties, and more on a planning centric client relationship maximized by technology.

The views expressed are those of Brinker Capital and are for informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

Monthly Market and Economic Outlook: January 2015

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

Despite geopolitical tensions in Russia and the Middle East, the end of the Federal Reserve’s quantitative easing program, weakness in growth abroad, and a significant decline in oil prices, U.S. large cap equities posted solid double-digit gains in 2014. International equity markets lagged U.S. markets, and the spread was exacerbated by the major strength in the U.S. dollar. Despite consensus calling for higher interest rates in 2014, yields fell, helping long-term Treasuries deliver outsized returns of more than 25%. The weakness in energy prices weighed on markets in the fourth quarter, with crude oil prices falling by almost 50%, the type of move we last saw in 2008. However, it wasn’t enough to prevent the S&P 500 from hitting all-time highs again in December. Volatility remained relatively low throughout the year. We did not see more than three consecutive down days for the S&P 500, the fewest on record (Source: Ned Davis Research).

In the U.S., the technology and healthcare sectors were the largest contributors to the S&P 500 return; however, utilities posted the biggest return, gaining more than 28%. Large caps significantly outperformed small caps for the year, despite a big fourth quarter for small caps. The spread between the large cap Russell 1000 Index and small cap Russell 2000 Index was 760 basis points. Growth outperformed value in large caps and small caps, but value outperformed in mid caps due to the strong performance of REITs.

BRICU.S. equities outperformed the rest of the world in 2014. The S&P 500 Index led the MSCI EAFE Index by more than 1,800 basis points, the widest gap since 1997. In local terms, international developed markets were positive, but the strength of the dollar pushed returns negative for U.S. investors. Emerging markets led developed international markets, but results were mixed. Strength in India and China was offset by weakness in Brazil and Russia.

As the Fed continued to taper bond purchases and eventually end quantitative easing in the fourth quarter, expectations were for interest rates to move higher. We experienced the opposite; the yield on the 10-year U.S. Treasury note fell 80 basis points during the year, from 3.0% to 2.2%. Despite a pick-up in economic growth, inflation expectations moved lower. In addition, U.S. sovereign yields still look attractive relative to the rest of the developed world. As a result of the move lower in rates, duration outperformed credit within fixed income. All sectors delivered positive returns for the year, including high-yield credit, which sold off significantly in the fourth quarter due to its meaningful exposure to energy credits.

Our macro outlook remains unchanged. When weighing the positives and the risks, we continue to believe the balance is shifted in favor of the positives over the intermediate term and the global macro backdrop is constructive for risk assets. As a result our strategic portfolios are positioned with an overweight to overall risk. A number of factors should support the economy and markets over the intermediate term.

  • Global monetary policy accommodation: We anticipate the Fed beginning to raise rates in mid-2015, but at a measured pace as inflation remains contained. The ECB is expected to take even more aggressive action to support the European economy, and the Bank of Japan’s aggressive easing program continues.
  • Pickup in U.S. growth: Economic growth improved in the second half of 2014. A combination of strengthening labor markets and lower oil prices are likely to provide the stimulus for stronger-than-expected economic growth.
  • Inflation tame: Inflation in the U.S. remains below the Fed’s 2% target, and inflation expectations have been falling. Outside the U.S., deflationary pressures are rising.
  • U.S. companies remain in solid shape: U.S. companies have solid balance sheets that are flush with cash. Earnings growth has been solid and margins have been resilient.
  • Less uncertainty in Washington: After serving as a major uncertainty over the last few years, Washington has done little damage so far this year. Government spending will shift to a contributor to GDP growth in 2015 after years of fiscal drag.
  • Lower energy prices help consumer: Lower energy prices should benefit the consumer who will now have more disposable income.

However, risks facing the economy and markets remain, including:

  • Timing/impact of Fed tightening: QE ended without a major impact, so concern has shifted to the timing of the Fed’s first interest rate hike. While economic growth has picked up and the labor market has shown steady improvement, inflation measures and inflation expectations remain contained, which should provide the Fed more runway.
  • Slower global growth; deflationary pressures: While growth in the U.S. has picked up, growth outside the U.S. is decidedly weaker. The Eurozone is flirting with recession, and Japan is struggling to create real growth, while both are also facing deflationary pressures. Growth in emerging economies has slowed as well.
  • Geopolitical risks: The geopolitical impact of the significant drop in oil prices, as well as issues in the Middle East and Russia, could cause short-term volatility.
  • Significantly lower oil prices destabilizes global economy: While lower oil prices benefit consumers, significantly lower oil prices for a meaningful period of time are not only negative for the earnings of energy companies, but could put pressure on oil dependent countries, as well as impact the shale revolution in the U.S.

While valuations are close to long-term averages, investor sentiment is in neutral territory, the trend is still positive, and the macro backdrop leans favorable, so we remain positive on equities. In addition, seasonality and the election cycle are in our favor. The fourth quarter tends to be bullish for equities, as well as the 12-month period following mid-term elections. However, we expect higher levels of volatility in 2015.

Our portfolios are positioned to take advantage of continued strength in risk assets, and we continue to emphasize high-conviction opportunities within asset classes, as well as strategies that can exploit market inefficiencies.

Asset Class Outlook Comments
U.S. Equity + Quality bias; overweight vs. Intl
Intl Equity + Country specific
Fixed Income +/- Actively managed
Absolute Return + Benefit from higher volatility
Real Assets +/- Oil stabilizes in 2H15
Private Equity + Later in cycle

Source: Brinker Capital

Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Past performance is not a guarantee of similar future results. An investor cannot invest directly in an index.

 

Monthly Market and Economic Outlook: June 2014

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

The global equity markets continued to climb higher in May. In the U.S. the S&P 500 Index hit another all-time high, gaining more than 3% for the month. The technology and telecom sectors were the top performing sectors in May, but all sectors were positive except for utilities. In a reversal of March and April, growth outpaced value across all market capitalizations, but large caps remained ahead of small caps. In the real assets space, REITs and natural resources equities continued to post solid gains despite low inflation.

International developed equity markets were slightly behind U.S. markets in May, but emerging market equities outperformed. After a weak start to the year, emerging market equities are now up +3.5% year to date through May, even with China down more than -3%. The dispersion in the performance of emerging market equities remains wide. Indian equities rallied strongly in May, gaining more than 9%, after the election of a new prime minister and his pro-business BJP party.

Despite a consensus call for higher interest rates in 2014, U.S. Treasury yields have continued to fall. The yield on the 10-year Treasury note ended the month at 2.5%, still above its recent low of 1.7% in May 2013, but well below the 3.0% level where it started the year. While lower than expected economic growth and geopolitical risks could be keeping a ceiling on U.S. rates, technical factors are also to blame. The supply of Treasuries has been lower due to the decline in the budget deficit, and the Fed remains a large purchaser, even with tapering in effect. At the same time demand has increased from both institutions that need to rebalance back to fixed income after such a strong equity market in 2013 and investors seeking relative value with extremely low interest rates in Japan and Europe.

Magnotta_Market_Update_6.10.14As interest rates have declined, fixed income has performed in line with equities so far this year. All fixed income sectors were positive again in May. Municipal bonds and investment grade credit have been the top performing fixed income sectors so far this year. Both investment grade and high yield credit spreads continue to grind tighter. Within the U.S. credit sector fundamentals are solid and the supply/demand dynamic is favorable, but valuations are elevated. Emerging market bonds have also experienced a nice rebound after a tough 2013. Municipal bonds benefited from a positive technical backdrop with strong demand for tax-free income being met with a dearth of issuance.

We approach our macro view as a balance between headwinds and tailwinds. We believe the scale remains tipped in favor of tailwinds, with a number of factors supporting the economy and markets over the intermediate term.

  • Global monetary policy remains accommodative: Even with the Fed tapering asset purchases, short-term interest rates should remain near-zero until 2015 if inflation remains low. The ECB announced additional easing measures, and the Bank of Japan continues its aggressive monetary easing program.
  • Global growth stable: U.S. economic growth has been slow but steady. Economic growth declined in the first quarter, but we expect it to turn positive again in the second quarter. Outside of the U.S. growth has not been very robust, but it is still positive.
  • Labor market progress: The recovery in the labor market has been slow, but we have continued to add jobs. The unemployment rate has fallen to 6.3%. Unemployment claims have hit cycle lows.
  • Inflation tame: With core CPI running below the Fed’s target at +1.8% and inflation expectations contained, the Fed retains flexibility to remain accommodative.
  • U.S. companies remain in solid shape: U.S. companies have solid balance sheets that are flush with cash that could be used for acquisitions, capital expenditures, hiring, or returned to shareholders. M&A deal activity has picked up this year. Corporate profits remain at high levels and margins have been resilient.
  • Less drag from Washington: After serving as a major uncertainty over the last few years, there has been some movement in Washington. Fiscal drag will not have a major impact on growth this year. The deficit has also shown improvement in the short-term.

Risks facing the economy and markets remain, including:

  • Fed Tapering/Tightening: If the Fed continues at the current pace, quantitative easing should end in the fourth quarter. Risk assets have historically reacted negatively when monetary stimulus has been withdrawn; however, this withdrawal is more gradual and the economy appears to be on more solid footing this time. The new Fed chairperson also adds to the uncertainty. Should economic growth and inflation pick up, market participants will shift quickly to concern over the timing of the Fed’s first interest rate hike.
  • Emerging markets: Slower growth could continue to weigh on emerging markets. While growth in China is slowing, there is not yet evidence of a hard landing.
  • Election year: While we noted there has been some progress in Washington, we could see market volatility pick up later this year in response to the mid-term elections.
  • Geopolitical risks: The events surrounding Russia and Ukraine are further evidence that geopolitical risks cannot be ignored.

Risk assets should continue to perform if real growth continues to recover; however, we could see volatility as markets digest the continued withdrawal of stimulus by the Federal Reserve. Economic data will be watched closely for signs that could lead to tighter monetary policy earlier than expected. Equity market valuations are fair, but are not overly rich relative to history, and may even be reasonable when considering the level of interest rates and inflation. Investor sentiment remains elevated but is not at extreme levels. Credit conditions still provide a positive backdrop for the markets.

Our portfolios are positioned to take advantage of continued strength in risk assets, and we continue to emphasize high conviction opportunities within asset classes, as well as strategies that can exploit market inefficiencies.

Asset Class Outlook Favored Sub-Asset Classes
U.S. Equity + Large cap bias, dividend growers
Intl Equity + Frontier markets, small cap
Fixed Income - Global high-yield credit, short duration
Absolute Return + Closed-end funds, event driven
Real Assets +/- MLPs, natural resources equities
Private Equity + Diversified approach

Source: Brinker Capital

 Brinker Capital, Inc., a Registered Investment Advisor. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Past performance is not a guarantee of similar future results. An investor cannot invest directly in an index.

Embracing Innovation: Envestnet Advisor Summit Wrap-up

VradenburgGreg Vradenburg, Managing Director, Investment Services

Last week we were honored to be one of the Premier Sponsors at the Envestnet Advisor Summit in Chicago. The theme of the event was “the next big thing” and it was evident everywhere. Envestnet Chairman and CEO Judson Bergman opened up the conference by talking about how advisors need to be disruptive innovators in order to succeed and overcome looming industry challenges. He stressed the importance of embracing technology, building brand and perfecting marketing and reminded us of past giants such as MySpace, BlackBerry and Blockbuster that did not take these steps and were not aware of happenings in the new markets and seemingly fell behind.

Envestnet President Bill Crager also talked about how the role of the advisor will become increasingly important in the next five years. As older advisors begin to exit the business, Crager projects that the average advisors assets will increase from $90 million today to $145 million in 2020. (Source: “9 Takeaways from the Envestnet Advisor Summit”, Financial Planning, May 20, 2014)

Conference attendees were also introduced to the Envestnet Institute, an online advisor education portal that features white paper, videos and webinars. Brinker Capital is proud to be one of the contributing content partners for this exciting new unified education portal.

Finally we were pleased by the informative “Liquid Alternatives Panel” that our CIO, Bill Miller, participated in. All panelists agreed the education around alternatives is key for both clients and advisors. Alternatives firmly fill a role in a portfolio by providing greater portfolio diversification as well as access to unique opportunities and strategies; however, they are just a piece of the overall pie.

Our thanks go out to Envestnet for hosting such a great event that allowed us to network with colleagues, investment professionals and Envestnet representatives! We look forward to next year’s Advisor Summit!

Implementing Technology

Sue BerginSue Bergin, President, S Bergin Communications

You don’t necessarily need the most cutting-edge technology to get to the top of your game. According to a recent study, you can start by leveraging the technology you already have.

Fidelity Institutional Wealth Services’ 2013 RIA Benchmarking Study reveals that high-performing firms—those in the top quartile for growth, profitability and productivity—focused on smart technology and adoption, not getting the latest and greatest. These high-performing firms focus on optimizing their technology in three areas: portfolio management, service, and client reporting.

Here are ten steps you can take to make sure you get the most from your technology.

  1. Make adoption a priority. Commit putting in the time and effort to learn how best to maximize all of the system’s features. If you can’t do it yourself, make someone else in your office accountable.
  2. Plan. Learning a new software program is like learning a new language. It’s hard to know where to start. Your technology provider should be able to give you an implementation guide to show you the steps to follow, and milestones to hit.
  3. Set aside time. If you don’t carve out time on your schedule, it isn’t going to happen.
  4. Network. There are relatively few programs out there that haven’t already been tried and tested by others in similar positions as yours. Talk to everyone you know who has gone through the implementation process and find out what they did and what they wished they had done better.
  5. Gather resources. Request an inventory of the training your technology provider makes available. Once you know what they have for support materials, you can choose the format that best matches your learning style.
  6. Optimize Your TechnologyGet names and numbers. You need to have key information handy in a few different areas. Know the software name, version number, and license holder so that when you call or go online for help you can be sure you are asking about the right program. Also know the names and numbers of customer support persons at your technology provider.
  7. Troll the internet. Use social media find online user groups or other social media sites that could provide helpful implementation hints. For example, there may be a LinkedIn User Group already established for the purposes of optimizing your software.
  8. Monitor progress. Perform periodic self-checks to monitor your progress towards the goals set in your implementation plan.
  9. Celebrate incremental success. Even if you haven’t learned everything there is to know, make note of how the technology improves your efficiency. Success is a powerful motivator and will prompt you to plow through your learning curve.
  10. Provide feedback. Software engineers constantly strive to innovate. If there is something you don’t like about your program or would like to see handled differently, let them know. You may just have a function named after you in the next version!

The views expressed are those of Brinker Capital and are for informational purposes only.

Tech Talk: Adding Value Through Technology

Brendan McConnellBrendan McConnell, Vice President, Business Administration

I recently participated on an advisor technology panel at the 2014 FSI OneVoice event in Washington, D.C. One of the topics of conversation highlighted the number of new technologies available and what technology an advisor should consider adopting. It starts with creating a solid technology foundation.

Financial services, not unlike most other industries, is a competitive landscape where it can be difficult to separate yourself from the pack, so to speak. There are a lot of skilled institutions and personnel promoting similar products and services. Embracing the right technology is one way to differentiate yourself. Adding technology to your practice can be disruptive, but a firm with the right appetite for change finds success in transforming the customer experience. Let’s look at a few tools and concepts you should start considering adding to your business.

Adopt a Customer Relationship Management (CRM) System
CRM systems are designed to help you manage your business more strategically and efficiently. They serve as the ecosystem where all relevant business data exists—from client contact information and account data, to prospect opportunities and service requests. Your CRM is the hub around which all other technology revolves. Most CRMs are now offered as cloud-based technology, giving you access anywhere on any mobile device and eliminating the need to support the technology infrastructure. The cloud delivery also makes CRM much more affordable. Use CRM systems to automate workflows and eliminate those time-consuming, manual procedures. Set up alerts so that you know when a new proposal is run or an account hits a specific threshold. Have emails proactively sent to your clients when a service case is completed or for an anniversary or birthday. Time is your most valued resource, add more of it through a properly implemented CRM system.

Adopt a CRM SystemIf you are currently using a CRM, your future technology choices should include an evaluation of integration with your system. Think of your CRM like a power strip that all other technology plugs into. This will provide you with a simplified infrastructure with one source and a single log in. If you are shopping for a CRM, take a look at your current core system, software, and platforms and find the CRM that will integrate best with your existing technology. If you follow this strategy it will eliminate the siloed technology approach, which often leads to inefficiencies.

Improve the Client Onboarding Process
As important as embracing technology is to your internal processes and procedures, it’s vital for enhancing the client experience. This is where you prove to the client that you add more value than simply serving their investment needs. A recent Fidelity RIA Benchmarking survey found that 77% of high-performing firms were focused on using technology to enhance the customer experience and satisfaction.

Client onboarding, for example, is an area worth the technological investment. Tools that allow for pre-population of forms, applications that allow secure, electronic signatures, using CRM data to customize templates—all of these enhancements create a unique and personal experience for the client. And we all know the adage “a happy customer is a loyal customer.” In addition, a paperless workflow technology can provide a tremendous amount of efficiency and process standardization that can help reduce resources required (time and money) and help eliminate mistakes.

Customization is KeyProvide Customizable Client Reports
What about the ongoing servicing of existing clients? Client reporting, much like the onboarding process, helps enhance and maintain successful relationships. Each one of your clients has an investing objective that is personal to them. You need to be able to provide them with a custom report that shows how they are measuring against their goals rather than trying to fit them into a predefined template. The one-size-fits-all model is no longer going to meet your clients’ expectations for the evolving world of goals-based investing.

The driver behind successful adoption of technology for any practice is internal participation. You must have buy-in within your organization or practice. Whether a one-man show or a team of 20, everyone has to commit in order to maintain a culture of innovation. With proper adoption of technology, enhanced client experience and satisfaction will be within reach.

Brinker Capital at the Financial Services Institute OneVoice 2014 Conference

Noreen BeamanNoreen Beaman, Chief Executive Officer

In June, we announced Brinker Capital as a Premier Sponsor of the Financial Services Institute (FSI), a voice of independent financial services firms and independent financial advisors.  FSI’s mission is to ensure that all individuals have access to competent and affordable financial advice, products and services.

FSI’s OneVoice 2014 Conference kicks off next week in Washington, D.C. where Brinker Capital is proud to be a Premier Sponsor as well as a presenter.  OneVoice is FSI’s annual conference for the independent broker/dealer community to network and gain knowledge of the latest within the industry.

FSI OneVoice Conference 2014We are honored to have our Vice Chairman, John Coyne, chosen as a panelist for the Alternative Investment panel; our Vice President of Business Administration, Brendan McConnell, as a panelist to share insight on the latest technology tools to help advisors gain efficiencies; and behavioral finance expert, Dr. Daniel Crosby, as a presenter on understanding investor behavior.

This year’s conference promises to be a good one as FSI celebrates 10 years of advocacy for independent financial service advisors and firms.  We look forward to seeing many of you there!

Technology Watch: Investing Into The Future

Dan WilliamsDan Williams, CFP, Investment Analyst

I recently had the opportunity to attend a conference that centered on the big ideas in technology happening right now. Hearing from such people as Andrew McAfee (author of the 2012 book Race Against the Machine and his most recent The Second Machine Age), Steven Kotler (author of Abundance: The Future Is Better Than You Think), and Charles Songhurst (former Head of Corporate Strategy at Microsoft), I can make a few blanket statements.

First, these guys are humbled, awestruck, and blown away by the advances being made in technology; specifically in robotics, 3D printers, and in general computing power. Second, the individual and the consumer will be empowered by this technology. Lastly, don’t try to pick the winning company, rather win by picking the area as a whole.

3D PrintingThis last point may seem to some as a “coward’s way out”, but consider the CNN Money article from December 31, 1998, Year of the Internet Stock. In this article Amazon, eBay, AOL, TheGlobe.com, Cyberian Outpost, and a few other names that have since been lost to history, are listed as stocks that had a great year and are part of the revolution. In the 15 years (1/1/1999 to 12/31/2013) following this article, Amazon and eBay clearly have proven to be the winners among the group, returning a cumulative return of 644.81% and 445.81% respectively as the others essentially went to zero. However, if you broaden the technology space, Apple would have been the big winner with an astonishing 5,569.77% cumulative return for this 15-year period. In other words, the idea that the internet was going to be a game changer in the way we communicate and the technologies we use was right, but our clever execution by picking the few likely winners likely would have missed the boat.

Now, let’s fast forward to today as we stare upon a robotic and biotech revolution. While there are a few select names that seem to be the smart bets to land among the big winners—given the magnitude of impact these two areas will have on the way we live and the uncertainty in the specifics of the path this change will actually take—picking an individual winner involves a level of hubris, while diversification within this idea can add value.

Future of TechnologyI left the conference fully convinced that these concepts, both current and future, are going to change the world; however, I remain very cautious regarding the execution and process. Without giving any type of recommendation, there exists at least half a dozen Biotech-focused ETFs. Late last year, the first robotics-focused ETF (ROBO) was launched—and it won’t be the last. All of these are less exciting answers to investing in new technologies versus trying to pick the winner, but as the American poet Ogden Nash once wrote, “Too clever is dumb.”