By Vasyl Soloshchuk, CEO and Co-Owner at INSART

For this interview, I went to Philadelphia to meet Lori Hardwick, a prominent leader in financial services with over 25 years of experience in the industry. Lori has been named to several top lists, such as the “Winners of WealthTech,” “Women to Watch,” and “The most influential people in the advisory industry.

Lori Hardwick - founder and president at AI Labs.

Lori started her career at an investment banking company and then moved to Nuveen Asset Management, where she founded the RIA division. In 2000, Lori joined Jud Bergman and Bill Crager to start Envestnet. In early 2016, Lori moved to Pershing and mid-2017– together with Mike Zebrowski, ex-COO of eMoney – started Advisor Innovation Labs (AI Labs).

We discussed trends, problems, and opportunities in the industry with Lori, and she also shared her tips on being a successful entrepreneur and industry leader.

Industry trends that feed the idea of AI Labs

It was early on in her career when she was a wholesaler for Nuveen when Lori realized that she enjoyed helping advisors. Today, she observes an increased demand for financial advice; and shows concern that the advisor market is shrinking:

“Over the last five years, about 500 broker-dealers have just vanished. These have not been acquired firms, these just went out of business. That equates to about 49,000 advisors 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.”
This trend brings the opportunity for technology companies (like AI Labs) to come into play, enabling advisors to improve their productivity, increase their scale, and help them to have more meaningful communications with their clients. According to Lori, AI Labs is building “

an interactive layer from a digital lens between advisors and clients.

Another trend that Lori mentions is skepticism about financial advisors and the entire industry caused by the crisis of 2008–2009. To overcome this skepticism, Lori believes the industry should offer more transparency to investors:

“In my mind, if we can get more transparency to investors about their portfolios, financial plan, spending and financial budgets and provide clients a holistic view, via an elegant and unified digital experience [that puts their advisor as the centerpiece of that engagement] that will only help to build trust between the advisor and client.”
At AI Labs, they aim to build, what they call, a “

system of engagement

” that will improve advisor–client relationships.

Open API’s is another trend in the industry and many technology companies are using these to bring more data and tools to their platforms. Lori warns that many advisory firms should be cautious of using API’s as it can quickly create a situation for which a firm becomes too tightly anchored to a particular custodian or a tool. She notes that many advisors are linking their clients to other brands to their accounts (e.g., Fidelity, Schwab, or Pershing) instead of reinforcing their own advisor brand.

Recognizing this, AI Labs has created a platform that enables advisors to switch from one data provider to another easily and at any time, while keeping the same exceptional experience within one chassis that brings all the various data points together.

“By bringing all the data into one central portal, it allows a firm to pivot into another vendor without changing the whole look and feel of the advisor and end-client portal. It is all about emphasizing the advisor’s voice and the advisor’s brand.”

Risk assessment based on continued acknowledgement

Earlier this year, Lori joined the board of directors for Riskalyze. The company has received several industry awards for the risk-scoring tool they have developed. Lori agrees that it is very important for investors to know where the risk is, and their risk score. As technologies evolve, the approaches to risk assessment will definitely change:

“Certainly there’s new technology out there focused on evaluating one’s risk tolerance. Some new technologies monitor the way your facial expression changes when you’re asking questions to gauge one’s risk. I think that more technology is probably out there but it’s in its early stages. It’ll be interesting to see how clients really tend to think about this and how they would prefer to communicate their risk tolerance to their advisor.”

However, Lori also highlights another aspect of risk assessment that is often ignored:

“We tend to evaluate risks on a household level. We don’t look at the partners within the household and where the risk lies independent of each other, and that has been a huge problem throughout our industry.”

Some advisors are only starting to look at individual risk levels; they add these to the household risk level and then calculate a blended rate or invest differently for each person in the family. However, this still only shows attitude to risk at a particular point of time.

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