Advisor Innovation Labs: A New Approach to Financial Services

Website https://advisorinnovationlabs.com/
Founded 2016
Clients Asset managers, institutional financials services firms, bank wealth-management organizations, independent advisor networks, and broker-dealers
Value proposition FinTech solutions that help financial advisors improve the way they work with their clients
Senior management Michael Zebrowski, founder and CEO
Lori Hardwick, co-founder and president

 

Advisor Innovation Labs (AI Labs) was conceived to help financial advisors build trusting relationships with their clients.

Lori HardwickTo meet Lori, president of AI Labs, I went to Philadelphia. She turned out to be a very optimistic person and very enthusiastic about her business. With over 25 years of experience in financial services, Lori started her career at an investment banking company. She then moved to Nuveen Asset Management, where she realized that she loved helping advisors. Lori subsequently presented an idea to build an RIA division in Nuveen and brought it to life. The RIA division is now one of the largest at Nuveen.

In 2000, Lori, together with Jud Bergman (CEO, Envestnet) and Bill Crager (President, Envestnet) and two others, started Envestnet and took it public in 2010. Six years later, she became COO at Pershing, a BNY Mellon company.

Mike ZebrowskiIn mid-2017, Lori joined Mike Zebrowski (ex-COO of eMoney) and his team of developers and designers in Philadelphia to found AI Labs. Lori explained:

“I know how hard startups can be. It was important for me to be there, feet on the ground with the team. So my husband and I decided to move [to Philadelphia].”

The system of engagement for advisors and their clients

Talking about trends in the industry, Lori says that they feed into the idea of the solution provided by AI Labs. One of the tendencies that Lori mentions is the shortage of financial advisors, which will affect the financial industry in the near future:

“Over the last five years, about 500 broker-dealers have just vanished. I’m not referring to those that were acquired, but these are BD’s that shut their doors. That equates to about 49,000 advisors, associated with those 500 BDs, in total that have left the industry. If you fast-forward five years, over 100,000 advisors in the US will either be at or nearing retirement.”

In this situation, Lori sees an opportunity where technology must assist financial advisors by helping them increase productivity and have more meaningful conversations with their clients. At AI Labs, they want to build what they call, a “system of engagement, an interactive layer between advisors and clients.

AI Labs

Since the crisis of 2008, financial advisors have been marred by skepticism. To make things better, the company wants to bring more transparency to end clients about their portfolios, financial plans, spending, and budgets. Hardwick believes that such a holistic household view will help build trust between advisors and their clients.

There is one more thing that the company wants to do to build the system of engagement. The company hopes to build an advisor platform and an end-client platform that would allow advisors to easily exchange data and allow for the advisor to easily pivot to a new data provider/financial services vendor if need be:

“By utilizing what we’ve built at AI Labs, if you change vendors, it doesn’t change the whole look and feel of the advisor and end-client portal. It is all about the advisor voice and the advisor brand, and I think that, unfortunately, those have been watered down in the most recent years. In fact, most advisors send their end clients off to Fidelity or Schwab or Pershing to view their statements and that just continues to reinforce those brands, not the advisor’s brand and voice.”

UX first, then back-end

Unlike other WealthTech companies that take a back-end perspective, AI Labs builds its platforms using a design-first approach.

“Our prospects have been trained to see things through the lens of the advisor. They are not necessarily thinking about the issues from the perspective of the client or investor which explains why many fall short of designing a truly elegant and differentiated client experience.”

Lori explains AI Labs’s approach of studying end-client wants and needs and designing an intuitive interface to meet those needs. Only then will they build in the back-end to make the system work and comply with all the regulations.

According to Lori, most end-client portals allow investors to view data, but not change it. This relates to all aspects of wealth management, including risk profiling, financial planning, and retirement.

“Given the current economic and political climate, a client may feel differently today about risk than she did two months ago. So, we don’t want risk tolerance a static variable that only gets discussed during the advisor-client annual review. It needs to be easily accessible so the client can make the changes when necessary.”

AI Labs’ platform allows investors to interact with data and change it without the need to pick up the phone and talk it through with an advisor. However, Lori emphasizes they are not building a B2C platform, but rather, they are working through financial advisor intermediaries (either a firm or an advisor) to deliver their solution to the end-clients.

Complementing instead of competing

The company’s goal is to build end-client and advisor portals that would be accessed via any mobile device of one’s choosing. The platform would allow advisors to choose features and data, so they can build their own ‘best of breed’ solutions.

“We’re not competing with firms like Envestnet, Tamarac, eMoney, Orion, [and] Riskalyze, but rather complementing. We’re just taking whatever the ecosystem is that each advisory firm has in place, and creating a unified portal of disparate data points. So, everything works better together.”

Based on their clients’ needs, AI Labs has already integrated with LinkedIn, BOX, TimeTrade, Envestnet, Brinker,Redtail CRM, MoneyGuidePro, Envestnet Yodlee, and Quovo and the most commonly used custodians.  Riskalyze and others are already slated for integration in 2019.

“One of our current clients has asked us to do three or four new integrations with different portfolio accounting systems, and custodians.”

To accomplish these integrations, AI Labs complies with the clients’ security requirements to get access to the data they provide.

There is also a chat feature inside the platform which the firm plans to use to help populate the advisor’s CRM system. This would allow advisors to build a thoughtful agenda and stronger relationships with end clients.

Under the hood

Mike Zebrowski, CEO of AI Labs, explains the firm’s hybrid architecture. The front-end is built on React, back-end components are built on Java, and Node.js is used for integrations.

“Java has universal appeal to our institutional markets. Like many industries, the financial service sector seeks to recreate the “Amazon network effect”. What this means is that we have our favored functionality and systems, and we want them all to get in lock-step so we can holistically address customers’ pain points.”  

This approach is about architecting solutions to link internally driven systems and capabilities into external systems so advisors can find new customers, tap into new sources of data, and improve business processes.

Mike draws inspiration from the Digital Mckinsey study which says: “CIOs and IT organizations have a huge role to play in capturing these opportunities. But they can’t do it through “business as usual.” In an ecosystem environment, an exclusive focus on “protecting the center” can limit a company’s ability to capitalize on emerging opportunities. To adapt their complex business-technology architecture to function in a world of ecosystems, CIOs will have to figure out how to simultaneously draw external technologies closer while managing security issues and getting a handle on the accelerating stream of technological innovations.”

AI Labs provides the “chassis” to assist these firms to move quickly into execution so that they can focus on building extraction layers into their core systems of record and position themselves in a more “governance” role as it relates to finding and allowing new participants into their ecosystem.  The days of waiting a year to plugin a new application into the ecosystem are gone, it needs to be weeks and or months to swap in new participants into the ecosystem.

Mike credits his team of highly talented engineers in building on the latest tech stack.  Nate Abele (Chief Architect) and Daniel Hawthorn (Head of Engineering) for example, drove the early architectural decisions to utilize: MySQL seemed more comfortable for the team; this is why they opted for it over PostgreSQL. However, Mike agrees that this choice may change as the database gets bigger.

To manage the deployment process, the team uses Docker along with Kubernetes. The entire platform is deployed to and runs in Amazon Web Services (AWS).

AI Labs Tech Stack

By taking the approach that we didn’t want to create a monolithic architecture, we looked to build on a progressive immutable platform which makes it easier to manage a large number of instances allowing:

  • Quicker deployments with fewer failures
  • High availability
  • Automated recovery to reduce application downtime

However, Mike notes that as the industry is evolving there are still some firms that  are challenged in moving to more of a progressive architecture as they attempt to extract value from the monolithic systems of engagement:

“Some firms still require us to either frame in their solution in or assist them in writing RESTful API’s in order to allow us to elegantly integrate.”

AI Labs has 20 people in total to build their product. The team includes a dozen software developers, UI/UX designers, and top management.

AI Labs office

The software development process is agile. The team frequently works remotely, with several people working outside of the office on any one occasion; however, they still participate in the daily stand ups and peer reviews. The team works on a  two-week sprint cycle. All testing is automated which allows for multiple deployments per day. Kubernetes helps to provide a continuous delivery pipeline. Mike highlights:

“We’re close to about 2,000 releases a month. It happens on such a daily basis; whereas, with the monolithic strategy, you can only release one, two, or three times a year.”

AI Labs CICD

Looking to marry the old with the new

Unlike most WealthTech companies, which prefer to hire software developers with some knowledge of the financial industry, AI Labs decided to have people who knew about financial services as well as those that didn’t, but had a strong consumer technology background. Lori explains:

“It was an intentional act. We were worried that if we hired more people with financial services backgrounds, it would actually just end up being more of the same. We wanted people with Apple, Google, Comcast, Amazon, [and other] consumer-based backgrounds partnered up with some industry veterans.”

Lori and Mike, who both had a very long history in financial services, were sure that people experienced in architecture and integration work would be better placed to help them put their idea into action.

AI Labs

According to Lori, once a month the team tries to get together to discuss clients’ needs and what the company can do about them. Together with Mike, Lori explains to the developers the role of financial advisors, what they do, and how they may do it.

“They [developers] certainly know end-clients. They know investors. They’re all looking at investing or talking to their parents about it. That part we do not need to explain.”

When explaining the role of the advisor Lori touches on all sides of their work, including ancillary pieces such as record keepers, custodians of all of the portfolio accounting systems, and turnkey asset-management programs. As a result, the team receives education and evolves, but does not focus on traditional patterns for issues that arise.

Final thoughts

AI Labs is a new and rather innovative startup. The letters “A” and “I” in the company’s name implies their intention to use artificial intelligence in their offering, although when pressed if there was any correlation, Lori said it stands for Advisor Innovation. At our core we believe that the best coaching and advice for investors comes from a relationship with a Financial Advisor, supported by the latest technology offerings. Which is why they aim to reinvent the way that financial advisors communicate with investors and to give end clients more tools to influence their portfolios.

The company is doing sterling work on exploring the end user of their platform. However, the design-first approach they adopt does not mean that they do not work on the platform’s back-end. On the contrary, the back-end is built so that any external tool that could be useful for an advisor can be easily integrated.

We will continue to watch AI Labs in terms of the innovation they introduce as the platform evolves.

Advicefront: The Platform for Financial Advisors with Their Clients in Mind

AdviceFront is an investment platform for independent financial advisors. It is based on algorithmic investing and behavioral side of financial advice.

WealthBar: Stress-free Online Investment

WealthBar provides online financial advisory, investment management, and financial planning tools to investors.

Quovo: More than Just a Data Aggregator

Quovo is a data platform providing insights and connectivity for millions of financial accounts across thousands of institutions.

Totum Risk: Thinking Outside the Box of “Just FinTech”

Totum is the digital risk tolerance questionnaire that helps financial advisors understand how much risk their clients can comfortably take based on their life situation.

Enterprise Wealth Management with MyVest: Successful Business with a Human Touch

MyVest is a FinTech trailblazer that is utilizing the power of technology to create its daring offerings.

AdvisoryWorld: Technology Investment Professionals Cannot do Without

AdvisoryWorld is a leading provider of technology for financial planning, portfolio analytics, and proposal generation.

PlanPlus: Goal-based Financial Planning with Ease

PlanPlus is an Ontario-based provider of a high-quality multilingual goal-based financial planning software. PlanPlus Inc. and FinaMetrica of Australia merged into PlanPlus Global in 2017.

NexJ: Intelligent Customer Management for Insurance and Financial Markets

NexJ is a global provider of cloud-based solutions for intelligent customer management used by large enterprises.