In the discussion of emerging technology and widespread use of artificial intelligence, there seems to be an assumption that back-office employees will soon be a thing of the past. However, those who have been developing the technology focus on this critical, often unseen aspect of the wealth management space tend to differ.
Digital Wealth News spoke with Louis Retief, co-founder and product owner of Hubly, a wealthtech provider focused on mid- and back-office operations. Docupace acquired Hubly earlier this year. At the time, Docupace CEO David Knoch said, “Hubly and Docupace share a passion for taking the complex, cumbersome and most arcane areas of the wealth management industry and transforming them into a unified, transparent and intelligent experience.” “This acquisition …[delivers] a comprehensive back-office ecosystem to the financial services industry.”
With this mandate in mind, Hubly and Retief remain dedicated to “bringing more humanity” into the way technology can enable these behind-the-scenes employees to support the growth and expansion of wealth management firms, while also remaining cognizant of the current industry mood around wealthtech.
“Firms have been burned one too many times by tech tools that either go out of business or don’t actually deliver,” Retief says. “Today’s decision makers are a lot more resistant to new technology than they were when I co-founded Hubly in 2019.”
DWN caught up with Retief to discuss emerging trends and how they will deliver on their promise to the market.
DWN: There is a lot of discussion in the industry about how to cut costs, drive efficiency and enable advisors to operate at scale. And it seems that most people are pointing to AI to enable that, especially in the back- and middle-office. Do you believe that AI can deliver on these promises? And if they can, does that spell the end for the back-office professional?
LR: There is no doubt that artificial intelligence will help shape the future of how all industries operate and likely eliminate all low-value task execution. However, I do not see a world in which AI replaces all back-office professionals. People always seem to jump to the negative side of things, maybe because it’s controversial. The biggest challenge in scale is not reducing cost but actually increasing the capacity of an advisor and their team. It is well documented that it is difficult for an advisor and their team of a couple back-office employees to serve more than 100 households. However, AI could help that team serve 250 or 500 households.
I believe that AI will increase access to comprehensive financial planning and advice services, and as demand for more financial advice increases, we will need solutions to help current firms serve more people. We need solutions that will enable RIAs to be profitable while serving households with fewer assets. AI can deliver this. Would that not be a more beautiful future to imagine, where everyone keeps their jobs and we increase access to services that are desperately needed by more households?
In the end, AI is only a tool and that tool must be put to work by a person. The back-office profession is key to the success of a wealth management firm. Today, they are overburdened with lackluster processes and tools that don’t fit their needs. We are here to change that, and AI can be a part of that.
DWN: Outside of the AI revolution, what is driving most of the tech procurement decisions right now?
LR: We find ourselves in the middle of an industry-wide tech stack reevaluation. Firms are cutting tools, consolidating platforms and reconsidering vendor partnerships. Technology adoption has plateaued, and people are tired of the complexity that the proliferation of point solutions has introduced.
We can’t “move fast and break things” anymore. Our systems are too important to mess around with and find out. We need to build systems that are not only powerful but also sustainable, streamlined, flexible and seamless.
The wealthtech market has reached its peak of new technology products. Next, there will need to be category winners, and we will continue to see consolidation and M&A in the coming two to three years. This is a natural cycle for any market, and it generally is a good thing. As you see M&A, you will see better products and more integrated products built for the market.
Firms know this, so we are making decisions with people in mind. If you want to be a long-term partner, show up like one. Understand your customer. Solve their real problems. Deliver with humility and consistency. This wave of consolidations can’t just be about numbers, but also about understanding who will use these systems and for what reason. Firms have been burned one too many times by tech tools that either go out of business or don’t actually deliver. Today’s decision-makers are significantly more resistant to new technology than they were when I co-founded Hubly in 2019. Decision-makers want solutions that help their people first.
DWN: If you were to point to one thing missing from the wealth tech conversation, what would it be?
LR: Humanity. While it may seem a bit cheesy, it’s the truth. For too long, the tech industry has prioritized driving efficiency and scaling at all costs by making advisors more efficient. And one of those costs was the human element of our industry. We must return to a place where technology enables people (specifically, back-office staff) to do more, not just for more to be accomplished. The lack of empathy and understanding in the development of tools reduces effectiveness and hurts the culture of the firms and institutions using them.
It’s easy to get lost in raw computing power at our fingertips. There is more processing power in the average smartphone than was available to the first humans in space. However, the person behind the screen is more important than any one component. That is how we build our products. They are strong, fast and nimble, but designed to help wealth management firms do more for their clients. Our technology helps people help other people.
We need more humanity in our technology. We need to build tools that help increase focus, reduce distractions and ultimately reduce clicks. The average back-office employee will click between 5,000 and 7,000 times per day on their computer interface. We have over-optimized click-based productivity, and it is time to change the focus to more deeply observe human behavior, redesign the user interface and better influence daily work routines.
