LOOKING INTO THE FUTURE OF WEALTH MANAGEMENT HARNESSING THE POWER OF SALESFORCE TO MANAGE MULTIPLE GENERATIONS OF WEALTH

The Time For A Truly “Turn-Key” Investment Solution Is NOWAs the psychic bruises from 2008-2009 fade, innovation in the for-merly disruption-averse wealth management industry has started accelerating again. We’re seeing firm after firm push corporate transformation plans in order to get ahead of the biggest genera-tional wealth transfer in history.

Those behind the curve are now staring at a race to the bottom as emerging clients take trillions of dollars elsewhere. The winners will reap the rewards. And with the clock starting to tick down, speed is becoming the most critical competitive factor of all.

It’s not too late to catch the crowd. All you need is the courage to embrace the future and a platform that won’t hold you back. The next few pages contain all the information you need to seize the opportunities ahead, without wasting the next year reinvent-ing any wheels.

High Standards, Higher StakesConsulting firm Accenture estimates that $2 trillion will change hands in the next five years, as the first wave of Baby Boom retir-ees start transferring wealth to their heirs. That’s more than $1 billion transitioning every day between now and 2020.

Given that 90% of new heirs switch advisors when they receive an inheritance, this transfer presents a competitive threat to firms that are losing accounts as well as a game-changing opportunity for those that can capture the flows. The winners will thrive. The losers face a road to diminished relevance if not outright oblivion.

The good news is that it’s not hard to anticipate what the next generation of investors is looking for in an advisor. For most ad-visors, technological advancements have made changing their business model easier now than ever before. These changes of-ten revolve around a shift in the way you deliver advice to serve this emerging client base. In the past, the barriers to entry were relatively high in terms of technology investment, and early adopters had to endure months if not years of upheaval before reaping the ROI.

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But to really grasp the disruptive ease with which wealth man-agers can now adjust their advice delivery systems to satisfy a new generation of clients, it’s crucial to understand the way the system itself is evolving.

Outsourcing the Portfolio to the CloudYour older clients grew up in a world where each advisor handled every aspect of the financial process personally or with the help of a small support staff. Many of these tasks were routine, effectively utility processes that were simply bundled in with the core work of mediating between individual investors and the financial markets.

The last few years in particular have seen that business model evolve as the advisor offloads those parts of the wealth manage-ment process that are time-consuming and can be automated or otherwise pushed out of the front office. We’ve already seen the split between the front office where we meet with clients and the back office where everything else happens grow wide enough that the “back office” itself can be almost entirely virtual, domiciled in the equivalent of a few servers and a call center that can be anywhere on the planet. That’s Cloud Computing at its most basic.

This bifurcation suits the mindset of younger clients perfectly because they are less focused on execution or any other utilitari-an aspect of the wealth management process. They want results and an open channel to you as the advisor they pay to make sure all the systems run flawlessly in the background.

Where this gets interesting is that you probably shouldn’t care about holding onto back office functions, either. With the excep-tion of certain narrowly defined regulatory requirements, the back office is almost entirely a commodity enterprise now. It’s a cost center, part of the overall drag that every wealth manager needs to cover in order to stay in business.

As such, many advisors have been eager to hand off an increas-ing slice of the back office so they can focus on front-office activ-ities where real value creation happens. Every minute you spend scanning portfolios and checking trade activity is time spent away from working with existing clients and prospecting new ones.

The process shift started small with tasks like account reconcili-

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High-quality relationships. They’re tired of the fill-in-the-blank marketing techniques that worked on their grandparents. They demand that an advisor have all the information at his or her fingertips and then draw on it to establish a personal bond.

A team player. The new generation knows how to Google up the expertise they need to answer a ques-tion. They want you to take a similar approach and reach out to specialist colleagues. Most of all, they want you to put your professional ego aside: out-sourcing is expected, cooperation is king.

Seamless interfaces. These are “digital natives” who grew up in a world of data on demand. Give them a fully integrated view of their finances that they can access from any device and they’ll be incredibly loyal.

The human touch. Any number of automated systems could get these clients decent outcomes. They’re looking to you to tailor the systems to their needs, drawing on personal experience that only a human being can provide.

Goal-oriented service. If you know who they are, you know what they want and how to use the finan-cial products at your disposal to get it. They don’t re-ally care about the products as long as the solutions inspire confidence.

Years of industry surveys has told us exactly what the next generation of investors is looking for in an advisor:

ation. At this point, the entire job of populating and managing the investment portfolio is now moving away from the advisor through an array of separately managed wrap programs and multi-asset-class vehicles known as unified managed accounts or UMAs.

While the specifics vary, in all cases, the principle amounts to uncoupling the portfolio from the work you do in the front office. Often the investment solutions that these programs provide are as good as what you could offer on your own, but at a lower delivery cost, liberating your personal time and attention to tasks where you are truly indispensable. Oftentimes the program is more sophisticated than anything you could offer on your own, supporting a wide range of asset classes that are often accessible to only the largest firms.

It’s best-in-market advice for your clients. That’s what they really want, and as the money moves across generations, it’s what they’ll go hunting for at the earliest possible opportunity. Giving them the same elite back office as they’ll get anywhere else gives you a chance to keep their accounts in your wealth management practice.

While it should be a logical proposition, not every advisor has embraced the approach yet. There’s the psychological hurdle of letting go and delegating what was once the core of a wealth manager’s professional identity: if you no longer “manage the wealth” personally, what are you? When advisors see the value they can create by spending more hours every day with clients instead of behind a screen, they generally let that question pass.

Then there’s the matter of operational disruption. Even the most deployment-ready asset management programs – often marketed as “TAMPs” to reflect the “turnkey” approach – can take months to get all the data lined up. It’s a long time to wait, especially in unsettled markets like these. And meanwhile, those next-generation clients are on the move, taking $1 billion per day with them.

Plug and PlayIn terms of time to market, the solution comes when we inte-grate the capabilities that a TAMP opens up into a robust existing

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MANY ADVISORS HAVE BEEN EAGER TO HAND OFF AN INCREASING SLICE OF THE BACK OFFICE

A GOOD CRM LIKE SALESFORCE PRO-VIDES EVERYTHING NEXT-GENERATION CLIENTS DEMAND.

technology platform. When an advisor is already on the platform, migrating their accounts is really just a matter of pushing a but-ton. Months can turn into days if not hours.

Previous approaches to technology development in the wealth management space focused on pushing specific tasks – rebal-ancing, portfolio construction, client relations – to a wide range of specialized software tools. Every new tool on the desktop en-hanced overall operating efficiency, but the fact that each applica-tion evolved independently actually made successive efficiencies harder to unlock as the desktop filled up.

Remember, each app was built by a different software compa-ny and relied on its own data format and operating architecture. They weren’t created to interact with each other. In many cases, the programmers made sure that their best technology would be difficult if not impossible to use alongside software from a competing vendor. The ultimate goal was to squeeze rivals off the desktop entirely.

Since then, consolidation in the industry has created several vendors that each offer something like an integrated platform of applications, but the evolutionary traces of their diverse ori-gins remain. Data formats remain isolated and mutually incom-prehensible, requiring extensive and often expensive transla-tion in order to make sure data generated in one application can be read by another.

Technology intended to simplify everyday wealth management tasks ultimately became complicated enough to feed an entire new class of software providers who do nothing but aggregate the data and cycle it through the system in a format that each independent application can work with. This data export, aggre-gation, and translation process is what traditionally makes TAMP deployment take so long.

The Core of the Front OfficeMeanwhile, front office technology has been evolving into its own platform approach, only from the client-facing side. This is where integration with client relationship management (CRM) systems becomes critical – and there’s no CRM with wider reach or a

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Data processing and memory

are outsourced to the Inter-

net to provide on-demand

resources. You can work from

New York, Beijing, Los Angeles or Sydney and

always be able to access a

client’s account information.

Users do not need to control

the specific computing

environment – unlike in an

office where an IT department manages the systems. This helps create a more secure

solution than an onsite network.

It is also a preferred

solution for disaster

management.

The cloud provider offers

its services -- networks,

servers, storage or applications -- as a shared

pool for all authorized

users. There’s no need to

invest in expen-sive hardware, databases or software for each of your

locations.

Users log in to their cloud account from

any device that has an Internet

connection, such as a PC,

tablet or smart phone.

THE CLOUD BUSINESS PROPOSITIONToday, most businesses use a cloud-based social, mobile and analytics-based model. Leveraging those technologies is critical to the success of wealth manage-ment firms, especially when the wealth transfer spans multiple generations. Customer relationship management solutions can help by offering a unified view of all client and prospect interac-tions, helping provide high-value services that build client loyalty.

CLOUD COMPUTING CAN HELP YOUR FIRM:Reduce costs. The cloud can cut your expenses for equipment and applica-tions, plus the costs to power, cool, house and install them.

Become more efficient. The cloud expands access to the latest updates, enabling innovation. You can implement applications faster and add capacity on demand.

Raise productivity. The cloud simpli-fies applications access, and reduces mundane IT tasks. You can focus on managing the business, not the technology infrastructure.

WHY GO TO THE “CLOUD”?CLOUD COMPUTING HAS FOUR KEY BENEFITS:

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deeper platform mentality than the one offered by Salesforce. A good CRM like Salesforce© provides everything next-gen-

eration clients demand. It tracks their interactions with you and ensures that they’re treated like individual people and not interchangeable account numbers. In fact, the right CRM makes all the back office outsourcing operationally possible because it gives you the tools to mediate between the automated TAMP and the human being who owns the assets. Your job is to trans-late the portfolio into hopes and dreams. The CRM has all that information.

Where Salesforce gets interesting is that if you’re using their system, you already have the front office covered. You aren’t going to migrate that data in the foreseeable future. Sawtooth has built their TAMP back from that front end to handle every-thing the back office will need, leaving the client-facing CRM capabilities completely untouched.

With Sawtooth’s integrated technology approach, all of the work feeds out of the Salesforce© screens. Every step of the process, from prospecting new clients to bundling and storing paperwork, is easily accomplished without having to use and learn a number of new applications. It’s simple, intuitive and because it’s already integrated into the Salesforce© ecosystem, it’s easily extensible and customizable.

There’s no heavy lifting required. You can get out from be-hind the screen and back in front of clients in a matter of days. What’s holding you back?

The New Standard for Wealth ManagersWith Sawtooth and Salesforce, there’s a new standard for advisors. For one, the advisor’s desktop can be quickly updat-ed. Many financial advisors have abandoned their stand-alone legacy systems and have chosen a Salesforce© environment for its next-generation advisor desktop, open platform, and easy integration with market data and technology partners.

That is just one small part of what makes the Sawtooth and Salesforce partnership so powerful -- having the flexibility to tune and brand the front end while leaving all the backend

Gain a 360-degree view of the client – A client’s complete profile can be accessed in CRM, from social media to back-office financial data.

Analyze important data – Financial advisors can gain powerful insights and real-time visualization to help clients reach their individual goals.

Enable mobile functionality – Relevant and timely data can be easy for financial advisors and clients to access wherever they are.

Use collaboration tools to their fullest – Advisors and their team have simple collaboration tools to share data and documents, and to leverage every-one’s expertise to meet a client’s goals.

Automate engagement tools – With these, a firm can proactively communicate with new and existing clients.

The world is your desktop. Use it to:

YOU CAN GET OUT FROM BEHIND THE SCREEN AND BACK IN FRONT OF CLIENTS IN A MATTER OF DAYS.

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complexity to the professionals. In one click an advisor can view a client’s current holdings. In two seconds they can pull a report. This eliminates hours of busy work and streamlines operations.

Thanks to feedback and collaborations with leading wealth management firms, Sawtooth’s solutions surpass those used in the past and introduce new options for financial professionals. Advisory teams find it simpler to manage clients with Salesforce than using popular consumer web sites.

And because Salesforce is available across online and mobile channels, advisors can deliver world-class service to an increas-ingly wired client population.

The One Constant in the Wealth Industry is ChangeThe rapid pace at which the changes are coming requires an adaptive wealth management solution.

At Sawtooth, our consultative process, along with our best-of-breed technology integration approach, makes us the perfect partner in these times of change. Advisors need to consider a custom-tailored, enterprise-wide solution that combines tech-nology, personalized proactive advice and service, and dedicat-ed support into a completely integrated service offering.

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About SawtoothSawtooth provides registered investment advisors, broker-deal-ers, trust departments, and banks with flexible solutions to attract and retain the best advisors, enable more effective business process management, accelerate client acquisition, and gain end-to-end visibility into firm-level assets under man-agement. The results are streamlined processes, predictable recurring revenue and consistently excellent client service.

For more information about Sawtooth, contact:

Erich Leidelerichl@sawtootham.com

(952) 831-9359www.sawtootham.com

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this document is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. Investment decisions should always be made based on the investors’ specific financial needs and objectives, goals, time horizon, and risk tolerance. The asset classes and/or investment strat-egies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. Past performance is not indicative of future results.

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