Morningstar CEO Kunal Kapoor had a different message to deliver at this
year's Morningstar Conference—its 30th. Kapoor explained that last year,
it was: “There’s never been a better time to be an investor,” because fees were
dropping and technologically driven tools were on the way. But offstage,
advisors confided in him that many of their clients were not getting the right
outcomes. So Kapoor tweaked his message from last year: “There’s never been a
better time for great advice,”
he now says.
For that, he credits advances in artificial intelligence, which have
helped bring high-level advice to more investors and lowered costs.
Kapoor, who was the subject of a Barron’s cover story, talked
about how Morningstar is positioned for the future of investing, discussing
sustainable investing, its tech-enhanced advisor tools, and its latest
AI-driven quantitative analyst-rating system, which would help the firm cover a
wider swath of funds that may otherwise not get the Morningstar treatment.
“One of the most common things that get asked: Why aren’t we covering a
fund with $10 million in assets? It’s hard to have bandwidth,” Kapoor said.
When Charles Schwab CEO Walt Bettinger took the stage, he
too was focused on the future and the state of technology for advisors. Why is
it, he asked, that we know when the pepperoni is being applied to our pizza,
but processing an account transfer is so opaque?
“You have to recognize that consumers expect a digital quality service
in a manner they are looking for and immediate, real-time service,” says
Bettinger. “We have to leverage technology to deliver better value to our
clients. Every dollar that we don’t take from their pocket that stays in their
pocket, gives them a better chance of meeting their goals.”
Schwab, of course, has been making waves with its robo-advisor offering,
Intelligent Portfolios, which posted the best two-year performance through Dec.
31, 2017, among other robo taxable portfolios. While Vanguard dominates the
robo world, Schwab is a close second, based on disclosed information.
That’s good news for at least one of Bettinger’s seven children, who
invests in the Schwab robo products. But one savvy advisor asked in a Q&A
following the panel if the main challenge will be tech and if low-cost robo
rivals Betterment and Wealthfront, which have
demonstrated their tech prowess, are Schwab’s main competitors?
“Who are they?” Bettinger said jokingly, and added, “The big challenge
is you can’t have tradeoffs—not just low cost, higher cost, great at
relationships, or great at tech. None of that is enough. My suspicion is that
the day is coming where the value of live interaction will be shown very
The Schwab chief seemed to be alluding to the day, perhaps in the near
future, when a significant market correction will have investors reaching out
to advisors for emotional support. The history of investor behavior shows that they
buy high and sell low.
That’s the biggest issue, says Bettinger: keeping people in the market.
And that might take a human touch rather than an automated one.
Click here for the original article from Barrons.