Technology with a Human Touch: Financial Advisors and the Future of Wealth Management

Sasha Dobrolioubov
Nov 17, 2015 · 8 min read

Sasha Dobrolioubov, Wharton FinTech VP of Education, and Patrick Biggs, a Financial Advisor with Morgan Stanley’s RBK Group, discuss digital innovation, its impact on traditional wealth management, and implications for Millennials.

This interview took place in November 2015.

Sasha: Let’s start with the basics — can you tell us about financial advisory program, the types of clients you serve, and the goals you help them achieve?

Patrick: First off, thank you for having me on your blog. Broadly speaking, Morgan Stanley has three divisions: The Institutional Securities Group (think investment banking, sales & trading), Investment Management (think mutual funds and other alternative investment vehicles), and Wealth Management. Focusing on , Morgan Stanley has nearly 16,000 Financial Advisors across the country managing nearly $2 trillion in client assets.

Regarding my role as a within Wealth Management, I’m a founding partner of a Financial Advisor team named , a multi-generational team located in New York City. We look to empower our clients to achieve their financial goals in a variety of ways: from working with young professionals coming out of business school and law school to help manage their student debt; to providing differentiated investment strategies that are designed to help grow and preserve capital for business owners; to facilitating financial conversations between parents and their children; all the way through to advising on strategies to help protect wealth during one’s retirement. Our clients’ goals and lives aren’t static, so we are connecting with them constantly to adjust and refine the financial strategies that best fit with their goals.

“The most successful model is one that combines the best aspects of a technology-driven model and the human advice-driven model into one seamless client experience”

Robo-advisors such as and , along with other personal financial management companies (, ) have been making headlines lately as they’ve aggressively tried to take market share from incumbent players like Morgan Stanley. What’s your view on this trend and Morgan Stanley’s position in the market as a result?

I don’t think this trend is exclusive to the financial services industry but is rather a reflection of a broader digital revolution that is cutting across all industries. A classic New York City weeknight for a typical working Millennial could include ordering a car service and a favorite meal through any number of mobile apps while FaceTiming a family member in a different state, and then catching up on news or social media while listening to music. This could all be done with a few touches on a mobile device without taking out a credit card or communicating with another person (in the traditional sense). That’s the world we now live in and I think robo-advisors and other personal financial management companies are a piece of that.

Regarding Morgan Stanley, I think our President, Greg Fleming, gets asked this question in almost every investor and media event he attends. I think he’s been incredibly clear in his statements that Morgan Stanley intends to be second-to-none in technology and will continue to invest in the digital space; however, our wealth management business will continue to be centered around the Financial Advisor for decades to come because people with significant wealth and those seeking to create it — our clients — will want an advisor relationship. At the same time, we will look to accommodate those who may be at an earlier stage of wealth creation and want to engage with us digitally.

How is your group, and Morgan Stanley in general, innovating to better compete with these new entrants?

From a digital perspective, I think you’re already seeing innovation at Morgan Stanley via our — available on phone and tablet — and newly designed online client portal. I truly think this is just the beginning of our digital expansion. I have many “next generation” clients in professions such as financial services, consulting, law, and entertainment, and I find myself talking about these new entrants almost every day. I’ve found that our team’s mission statement of “classic wealth management principles (enduring relationships and high touch service) executed in a 21st century way (total balance sheet management, technology intensive, team approach)” resonates with all of our current clients and prospects, and particularly with Millennials.

There are many financial tasks that Millennials want to accomplish digitally, such as depositing checks or reviewing daily investment performance. However, when it comes to more complicated life issues such as analyzing various mortgage options, developing a savings strategy to pay off student debt, or reviewing the pros and cons of different life insurance products, I’ve found that they want live advice and want to engage in a dialogue with a person. As a result, I think the most successful model is one that combines the best aspects of a technology-driven model and the human advice-driven model into one seamless client experience.

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It’s been said that Millennials are the hardest demographic to capture across practically any dimension of financial services, given our tendency to prefer technology to people after the financial crisis of 2008. How do you and your group approach the Millennial market?

I’d actually disagree with that statement. If you think about it, the upper end of the Millennial generation just turned 35 years old this year and 35 is often the beginning of one’s “peak earnings” years. So the majority of Millennials are just beginning their wealth accumulation process now. You do have the baby boomers entering retirement; however, the massive wealth transfer from baby boomers to Millennials that you read about so often in the media won’t happen for several decades, given longer life expectancies. So if anything, I’ve found that for better or for worse, many traditional wealth management firms have been ignoring Millennials and their needs, not the other way around. Combine that concept with the digital revolution that has taken place in this country and it’s very easy to see why so many Millennials are gravitating towards these new wealth management models, as it’s the type of model that’s most accessible and relatable. In my experience in working with Millennials (and being one myself), I think we do actually appreciate the human interaction and advice that a Financial Advisor relationship can bring us early in our career, especially if you have the prospect of accumulating wealth at an early age.

Having said that, there is absolutely a higher barrier to entry for Millennials given our sensitivity to fees, desire for constant access to information, and need to understand the value we are receiving for the price we’re paying. However, there are two overarching themes that I’ve found when working with Millennials. First, they love being able to call a “212” phone number (that’s the Manhattan area code) directly to my team’s line to speak to someone on our team instead of having to call a “1–800” number. Second, Millennials are incredibly busy, almost too busy, and need to have a person there continually guiding them along their financial journey so that they don’t let their emotions dictate their financial decisions. If you think about it, Millennials have endured one (or potentially even two, depending on age) massive wealth destruction events over their lifetimes: the tech bubble in the early 2000s and the financial crisis in 2008–09. Those events have absolutely influenced the way we view our finances, similar to how the Great Depression influenced our grandparents’ decisions and the high inflation years of the 1970s influenced our parents’ views. In your financial journey, to steal a phrase from ice hockey, you need to skate to where the puck is going, not to where it has been — and I truly believe that having a person there to advise you along every phase of that financial journey is imperative. Those critical human interactions are something that technology can never replace.

Where do you think the financial advisory space will be in 20 years, in relation to the different types of players we’ve talked about?

I think you will see consolidation in the space to create more “one-stop shop” business models that are very relatable for Millennials. Our team believes in delivering the four pillars of wealth management — asset management (asset allocation and investing), liability management (providing access to banking and lending services), lifestyle management (financial planning and budgeting), and risk management (life insurance) — to all of our clients. We are able to provide all of these services to our clients because Morgan Stanley’s open architecture platform is one of the most expansive, inclusive platforms in the industry. For example, our clients could have their financial plan, investments, mortgage, and life insurance policies all at Morgan Stanley through one seamless experience with our team, and I think this is an incredibly attractive value proposition, especially to Millennials who value simplicity and streamlined offerings. I don’t see that model in the space today, but I could see future mergers between pure investing platforms and peer to peer lending platforms, for example, in an effort to consolidate financial offerings and to compete with our “one stop shop” model.

Next May, I’ll be 27 years old, broke but with an MBA. What’s one piece of advice you’d give me and my classmates who may be in a similar financial situation?

As cliché as it sounds, the best piece of advice that I can offer is to have a plan and to execute that plan. As I tell all our clients, the ultimate goal for any financial plan is to increase net worth and achieve financial independence. In order to meet that goal, it’s imperative to have a plan in place with a strategy that reflects your risk tolerance and current financial picture. As I alluded to earlier, your goals will continually change as you hit new life events — for example, having children or starting a new job. It’s very important to take a methodical approach to updating your financial plan throughout life’s different phases and then have the discipline to implement those updates in your financial plan.

Patrick Biggs is a Financial Advisor with Morgan Stanley Global Wealth Management in New York. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates.

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Thanks to Daniel McAuley and Matthew Applegate.

Sasha Dobrolioubov

Written by

Second year MBA student at The Wharton School and the VP of Education of Wharton FinTech.

Wharton FinTech

We are FinTech thought leaders connecting innovators, academics, and investors with the ideas and companies that are reinventing global financial services.