T3: Data, Cybersecurity Overshadow AI

Charles Paikert US Correspondent Las Vegas January 26, 2024

T3: Data, Cybersecurity Overshadow AI

Our US correspondent considers the main themes that arose in the annual T3 tech conference, held in Las Vegas. Unsurprisingly, AI was on the agenda, but it did not dominate discussions.

It turns out that it was at least a year too soon for artificial intelligence to take a bow on center stage at the annual T3 tech conference for financial advisors. (See a previous article from the same event.)

RIAs and the vendors who service them were instead much more focused on less glamorous, but vitally critical, aspects of software infrastructure such as data storage, account openings, integration, CRM, estate planning and cybersecurity.

“RIAs are still feeling their way when it comes to AI,” said Jalina Kerr, managing director of advisor experience for Charles Schwab.

“They’re still in a holding pattern. There’s fear about accuracy and concern that until they get better clarity from regulators on what they can and can’t do, it might be a fool’s errand to get started and then have to start over.”

This nascent state of AI at present reminded Michael Kitces, co-founder of the XY Planning Network and publisher of the Kitces Report, of the early days of the internet in the late 1990s.

Shades of the early internet
 “You know it’s the future,” Kitces said, “but you don’t quite know what to do right now. The big question is whether AI applications are going to be provided by startups, or will incumbents just layer them on their existing platforms?”

Both vendors and advisory firms are “figuring out applications for AI,” said Grant Rawdin, president of Wescott Financial Advisory Group in Philadelphia. “We’ve already seen problems with accuracy so we’re going to wait until the more sophisticated vendors figure out how to use the technology the right way.”

While there was certainly talk about artificial intelligence among T3’s 1,000 attendees, AI was featured in surprisingly few of the promotional presentations by tech vendors that comprised the bulk of the conference’s content.

"Do more on cybersecurity!"
Instead, advisors grappled with longstanding problems of integrating their tech stack, improving the functionality of must-have software like CRM, financial planning and portfolio management and incorporating popular new programs such as estate, tax and healthcare planning.

Advisors’ need for better cybersecurity was singled out by T3 founder Joel Bruckenstein. 

“You guys are not doing enough on cybersecurity,” Bruckenstein admonished the attendees. “Every RIA should be able to say ‘I have a cyber expert’ but most don’t have one. If you’re going to cut corners in your operating budget, cybersecurity is not the place to do it. And if you take one thing away from this conference, it's do more on cybersecurity!”

Data: "digital gold"
At the conference’s closing session, Bruckenstein cited cybersecurity as one of “the three pillars” of the firm of the future, along with data and AI.

Data is “digital gold,” Bruckenstein said, but wealth managers have problems mining the data they have, moving it around and controlling it. As advisory firms move toward a future where they will build their own data warehouses and “data lakes,” issues of storage, security and usage will become paramount.

Control of data is definitely a top technology issue for RIAs, according to Fidelity vice president of technology consulting Judy Lee.

“Advisors want to own the data that goes into their CRM, that goes to custodians, and into portfolio management systems,” Lee says. “They want control of the data and to be able to use it on their dashboard and in the cloud. They don’t want it dispersed.”

The problem, according to Bruckenstein, is that data is easy to flow into a tech provider but hard to get out. “Advisors love their provider until they don’t,” he said.

“The first question you should ask a provider is ‘How do I get out? and ‘How much will it cost?’”

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