In this episode of Advice Architects, host Day Wachell leads an engaging discussion with Scott Reddel, Managing Director at Accenture and a leader in the wealthtech ecosystem. With over two decades of experience, Scott delves deep into the transformative shifts in wealth management, emphasizing the evolving client needs and the role of technology in shaping the future of financial advice. As clients increasingly seek access, education, and trust, the challenge for advisors is to consistently meet these demands while balancing intelligence (IQ) and emotional intelligence (EQ). The conversation also touches upon the expanding definition of "advice", emphasizing its holistic nature that goes beyond mere financial planning. With the industry at a crucial inflection point, this conversation underscores the need for adaptability and innovation in the face of changing client expectations and technological advancements.

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For more information about Scott Reddel, you can find him on LinkedIn and Twitter/X.

For more information on Responsive AI’s solutions for advice providers, please contact us.

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Day:

Welcome to this week's Advice Architects episode titled, The Time is Now, The Inevitability of Changes in Wealth Management. Welcome to Advice Architects. This is Day from Responsive, and today we are speaking with Scott Reddel, Managing Director and part of Accenture's CAPM Wealth Management Leadership Team with around 15 years of innovation and large scale transformations at investment banks, wealth and asset managers, serving as client account lead for many clients and leading the digital wealth platform and technology there. He's passionate and engaged in the rapidly evolving wealthtech ecosystem, including the Accenture Fintech Lab in New York, where my business, Responsive AI, had the great pleasure and honor of participating in. The Fintech Lab is amazing. It brings together some of the largest financial institutions in the world with innovators, mentors, and sponsors. We learn so much and I got to have a lot of great conversations with Scott during the course of the program. Scott, welcome to the show.

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Scott:

Yeah, Day, thanks for having me and I've enjoyed kind of getting to meet you through the Innovation Lab process and kind of seeing what you guys have been able to do. So excited to be here.

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Day:

Thanks so much. So some of the ideas from today are pulled from your excellent article, The Shift in Wealth Management that Needs to Happen. We're always interested in talking about what drives the need for change. We're innovators, so we wanna know the why as much as the what and the how. Before we start the show, we do the advice architects questionnaire. It's like a Proust questionnaire just to get to know you and understand your relationship and feelings about WealthTech and FinTech. So to start, what's your job title and what do you actually do?

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Scott:

Yeah, so formally, I run wealth management and retirement at Accenture. And so essentially every part of our business that touches advice and really planning for the future falls under me. So that it ranges from strategy, digital experience through to execution of a lot of transformations we do. So that's kind of my title and my role.

What I do day-to-day is really spend time with as many of our most important clients and teams as I can, really driving a lot of the change that we're seeing in the market. What I do really enjoy about that is that it allows me to see kind of everything from sort of the family office and ultra high net worth white glove firms that we work with down to the mass market, retail brokerage, digital firms. And so getting to see every flavor of advice model, every flavor of consumer client and what they need in terms of advice is really kind of what keeps me waking up every day and excited about work.

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Day:

Awesome. How long have you been doing this for?

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Scott:

Yeah, about 20 years. So I've kind of lived through a number of evolutions in the market. I grew up doing a lot of M&A merger integration work as wealth firms were consolidating. And then after the crisis, kind of dove into digital as we all did and have kind of ridden the wave of the various innovation and transformation that's happened in wealth. 

And I think, we're sort of, in my mind at least, at a unique inflection point similar to where we were after the crash a decade ago, where there's sort of a coming wave of innovation and other things that are really kind of responding to a new set of consumer demands. And obviously we'll get into that, but it's an exciting time to be in the industry.

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Day:

So on that note, when and where were you happiest in your FinTech travels or experiences?

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Scott:

Yeah, you know, I've grown up in my career in consulting, 20 years a consultant, so I don't always get to make an honest day's living. But I do find I am a builder. And so I'm most passionate when I'm with clients in the trenches kind of seeing things happen. So I think broadly, some of my most rewarding experiences are with clients, be them wealth managers or fintechs where we've launched new businesses, carved out new entities, done different things, where we're actually kind of getting to see things come to fruition. So that's kind of been my passion. You know, what's exciting now, right, is I see so many organizations really kind of, you know, targeting the white space in the market with big new things. So not just developing strategies, but really building, launching, transforming. And so I find a lot of like, what I find rewarding is happening in market. And so it's a fun time to be here.

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Day:

Awesome. Why do you care about wealthtech?

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Scott:

Yeah, you know, stealing a term from a colleague of mine, you know, wealth management, it's like the perfect balance of IQ and EQ. And so what I find so interesting about it is it's such a complex thing to get right, an advice relationship, but when you do, it's so powerful. And so I think the allure and promise of how wealthtech and innovation can really help scale that in different ways. It's really exciting, but really complicated. And I think, you know, we've seen one wave of that with digital and other technology, but you know, what you guys at Responsive and others are driving with kind of the next wave of AI and intelligence infusing into that, it's really interesting to see how that can kind of scale that relationship in a different way.

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Day:

Awesome. I mean, that's why we that's what we're interested in too. So agree to agree. Okay, into the show proper. The time is now. You know, it feels like something magical has happened and has been happening. We've had digital for some time, those evolutions have been happening, organizations have been absorbing that, what that means. And now, you know, a level of AI that is astounding has arrived, has captivated everyone.

How is the nature of advice changing, not from the technology side, but from the human side, starting with clients?

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Scott:

Yeah, so I mean, the way we think about the change in advice, it's kind of what you just said, which is it really is all being driven by the end client, the end retail investors, what's happening in the ecosystem. So there's a lot of trends you can point to, right? So there's the aging demographics and the generational wealth transfer that's happening. There's newer generations coming online with wealth. But when we look broadly across all those things.

The three themes that emerged the top for us that consumers are wanting is really access, education, and trust. And so how do we get access to the right advice, the right products, the right capabilities in a way where it's sort of curated and provided insights around that and done in a way where we trust the institution or the intermediary that's providing it to us. And I think current advice models we see do that well in cases, but not consistently. And so we're kind of seeing really consumers or retail investors really drive a change in kind of the need for those three imperatives towards the ecosystem.

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Day:

And as far as trust is concerned, I mean, what do you view is the biggest obstacles or pressures around that topic for the clients you're serving and maybe where the client could be driving that story?

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Scott:

Yeah, you know, it's what we generally find is it's not a lack of trust you always have with the institution, but do you have kind of the consistent consistency in the level of trust and the high degree of confidence level trust. So you know, one of the interesting things we found in our in our last client study is over 50% of clients, you know, Gen Y and younger, were going to alternative channels for advice validation when they had an advisor. So going to social media channels or elsewhere. And it's not that they didn't trust their advisor, but because there's so much out there, they're looking for validation and looking for validation in a way that's really personalized to them. So when we talk to our clients about developing that trust, it's not just trust overall, but how do you develop that personalized relationship that trust kind of is consistent and evolves over time with your client?

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Day:

What do you think about financial literacy and any demand and market there relating to this topic?

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Scott:

Yeah, so, you know, what we've really found is, you know, going back to the access and education, there's no shortage of access. We found there's really a gap or a need for education. And so, you know, I wouldn't say that the market is just totally undereducated, but the world is getting that much more complex. And so if you look at kind of the increase in financial products and investments that are being offered to people, when you look at for consumers how complicated their lives are becoming, there is a real need to increase the financial literacy and very much of doing it earlier in life. So, what we've seen from a lot of our clients, what we work with them on is how do you interject that financial literacy, not at the point when you have a financial advisor relationship, but earlier on. So, it often becomes an onboarding mechanism or an on-ramp to an advice relationship because you're out there in market developing literacy or other things earlier on.

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Day:

The term advice itself also kind of seems to be evolving and expanding. So in the past, this might have meant like suitability or a plan and a portfolio. How is this category changing and its meaning and its responsibility?

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Scott:

The biggest change I would say we've seen and kind of pushed in the last few years is, you know, so there's a lot of terms from hybrid advice to holistic advice, but really how do you think about flexible advice? And so, you know, one size doesn't fit all obviously for your different clients, but then the recognition that really flexes and evolves over time. So at a point in a person's life. And so what we're seeing really resonate is sort of advice as a service relationship. So a financial advisor is a quarterback for someone's financial needs overall. So at times you're very much an advice deliverer. At times you're a service provider of different mechanisms. And often you're an orchestrator pulling in, you know, in a state planner or different things. But we see the firms that do that well, they're able to flex and really evolve to what the client wants.

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Day:

So now in terms of what you're seeing in the market, is this a rarity? Is this a common thing? Is this a model that is maybe hard to achieve? And what are the barriers to moving towards that kind of that quarterback, wide bench model, I guess we call it. Yeah.

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Scott:

Yeah, I mean, at the top end of the market, you know, there's firms that do it really well because when you have, you know, large relationships with large teams, you know, the cost to serve really supports that. It's very much hard as you move into the mass affluent mass market. You know, digital and wealth tech overall, I think, is really starting to unlock that. The biggest barrier is, you know, just knowing much more about your client. And so, if you’re able to have that digital capability that really is tracking all of your client interactions, flexes so that they can kind of drive how they interact with you a bit more. That's where we see firms being able to flex more so because it can be client guided to some degree and so you're not so reactionary.

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Day:

The way retail investors consume advice is also changing. Then those expectations are changing. So can we go inside those expectations to start? And then maybe we can do a follow on about how advisors need to respond or adapt.

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Scott:

Building on what we have started to talk about. So last time we interviewed and surveyed clients, 90 percent of them wanted humans somewhere in the advice relationship. So, you know, when we talk again about like a hybrid advice model, right? You know, my personal view is there's a human in almost every relationship, but there's a there's a big spectrum, right, between a full service financial advisor and maybe a virtual assistant advisor at certain points that really matter. So I think that's one thing. The other thing that jumps out is, again, this term holistic advice, very much clients are expecting you're providing advice in their full financial relationship. I think what's really kind of evolving is how much you're actually able to integrate executing on that advice within that relationship. So are you able to get them access to insurance product, retirement, mortgage in an integrated relationship. And then I think the third thing we've really seen in terms of advice needs is, this concept of just longevity, family planning, not just the aging boomers that are really phasing into retirement, but even the Gen X who are capturing most of the assets over the next decade, how they're thinking about kind of caring for elder patients, how they're thinking about wellness, increasingly how they're thinking about healthcare is a broad part of their large spend. And so, I would say like the aperture of advice has broadened a bit beyond just traditional financial needs as well.

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Day:

So there's a broadening of the concerns of advice. And in a way, like, you know, digital and hybrid, they can take away work and they can take away complexity, but what's your experience in seeing, like, the coordination and the integration of all these things across different service lanes in the market? Like, where are we today? Are there gaps? Are there room for improvement?

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Scott:

You and I have talked a little bit about this in the past. I'm a big believer in all of the innovation that the wealth tech ecosystem and firms like yours have been able to drive. As soon as you bring that in the four walls of an enterprise though, it does get increasingly complex. The biggest barrier is if you think about delivering advice that's digital plus product plus execution. The value chain and the tech architecture just gets complex very quickly. And so, you know, for a lot of our clients, the biggest barrier to WealthTech is how do we simplify and integrate? And so, you know, the biggest thing we really work on with firms like yours is how do we kind of embed within the advisor life cycle, within the client digital experience, and really kind of make it seamless, simple, and easy to access.

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Day:

And for your customers, and maybe there's not one size fits all, where's like, to me, wealth management is just like an aircraft carrier in terms of the complexity of the advisor role and all the bits and pieces. Where is the best place to start? Like, is it digital? Go digital first? Is it something on the advisor desk? Like where are the sort of points of engagement where you think it's easy to tackle in this massive architecture?

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Scott:

There's two approaches that we see working. And basically, regardless, either sits within that advice life cycle. So there's firms that take a very, very client led approach, and there's firms that take a very advisor led approach. But in either scenario, you're never going to have sort of a fully digital platform led capability. Like I think there's very much human aspect to this. So, the firms that do it well, what we see is figuring out what are those unique points in an advice relationship that really drive differentiation. So what your clients really care about, what really allows your advisors to operate effectively, and embedding kind of the innovation, the FinTech, within those moments. So a great example is in your advisor's digital workspace.

You know, they're probably setting up a plan and doing you know kind of unique onboarding things for their client. Do they have access to the right product or the right portfolio modeling or things like that are really going to drive the relationship and making sure those specific things Like are embedded in a really seamless way.

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Day:

So we've talked to, through the program, we've talked to some financial advisors in the high net worth category at some of the larger businesses here. And in the case where they're servicing 40 families and they get face time and they have a team backing them up doing the data work and the modeling, that combination of IQ and EQ is working, right? And I think the question is, can this model scale down into mass affluence and wider out? Right now how would you frame the problem of achieving that IQ, EQ, superpower as you don't have the scale or you can't support that with the revenue?

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Scott:

Yeah, you know, I going back to my point where, you know, the clients we talked to 90% when a human in the relationship, I think the big challenge right now when you think about scaling at the lower end of the market is if you're an advisor or a human in relationship, you're spending a lot of energy worrying about both things that really differentiate yourself to the client and things that sort of don't, but you have to do. So operational things, figuring out within your book of business, where to target so forth. And so when we think about like innovation and wealthtech and how that can really scale or drive cost to serve, it's really taking out all those things that I don't want to say are undifferentiated, but can be replicated by intelligence or technology and really truly kind of focus the unique human EQ things. Leave that with the humans and free up their time to really drive that.

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Day:

So what we've seen in the market kind of, and mass affluent is something people talk about a lot, and it seems to be a middle ground that people understand is important. But what we do see is, you know, there is the sort of digital retail end, and then there's the high net worth end. What's the risk to businesses that don't kind of solve that problem of how to service those clients in between? And do you have any thoughts about how much value is on the table for that segment – and how much of an imperative is, the title of the episode is why now?

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Scott:

Yeah, so a couple thoughts there. So, you know, one, you know, a lot of, a lot of folks have cited this data where if you look over the next decade, as I mentioned before, like most of these, these assets that are transferring are really going to settle in the Gen X. And so there's like a unique kind of period where you need to have a strategy for those folks as they really kind of come into their wealth.

We and I think the industry traditionally used to think of massive affluent as $250K to a million in assets. If you look at just sort of inflation where the market's gone, that really is ranging up to like three, three and a half million now. And when you start to get in those numbers, particularly as the transfer is happening, those are, it's a unique space where your needs are reasonably complex, but to deliver it successfully, you really are going to need to scale. And so I feel like there's the sweet spot of you need to have a pretty sophisticated offering, but digital and technology really needs to scale that for you. And so we see that as a competitive frontier where a lot of firms are tackling and targeting.

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Day:

So to sort of kind of frame it, there's a type of user, GenX, and if we wait until they have the money to upgrade the service, it might be too late to win their trust and loyalty. Let's talk about GenAI a little bit. It's been talked about a lot, probably to death. But there's a stat here about the number of folks who are actually using GenAI, 47% of Americans, to get financial advice, right? And there's risk there, but how do you see this technology working with or against or being a risk or being a value to financial advice in these businesses?

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Scott:

One of my favorite topics we spend a lot of time on. So from an end client perspective, so to like build on your stat, you know, I think about Gen AI a little bit like social media and the finfluencers, you know, a year ago where, you know, there's this recognition like retail investors are going to these channels to validate advice or get advice. And so you just you need to be aware of that and kind of think about that as you're, you know, you're planning your offerings.

There's a bunch of risks in terms of what's the quality of that advice. It's not regulated and so forth, but you need to be aware of that. When we talk to our clients and when we're working with them on Gen AI, much of it right now is embedded within the four walls of their organization. So how they're using Gen AI to power advisors with insights, servicing capabilities and things like that. And that is largely because I think just some of the open questions around privacy, risk and so forth.

And so if I look at this calendar year, that's where the biggest impact is made. When we look at just broadly the vision for Gen AI and what it can really do, there's lots of things we've envisioned around a Gen AI image generating planning experience. So imagine being able to depict yourself in retirement the way you want to be and then talk about the experience relative to that. So I think there's a ton of open boundaries there. You know, it's something that I think is going to take a while to sort out. The one thing we do really see is, to my point of using digital and technology to really – allow humans to focus on the truly EQ type of capabilities. Gen AI kind of brings a new level of things that can be taken off an advisor's plate or accelerate an advisor's ability to serve their clients.

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Day:

And are there any sort of cautionary notes within that world that are worth considering? 

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Scott:

Privacy is obviously an open question. The other thing we really look at and are focused on is just the inherent biases embedded within the Gen AI. So how do we make sure you're responsible about it, especially as it's increasingly being rolled out to advisors who are talking to clients? And then I think all the regulators are very much looking at this and what the implications are. And so, just understanding how the ecosystem is going to involve is just something you need to keep an eye on.

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Day:

Okay, so at the end of the show, we do kind of our deep thought or deep question, could be a call to action. We've discussed evolving client needs in the market. And particularly, it seems like there's an imperative to scale this IQ/EQ capability for advisors in these smaller accounts. What do you think advisors and advice businesses can focus on? Like if you're giving them a short laundry list of priorities, what are some here and now, things they can focus on to meet these demands.

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Scott:

Yeah, so I mean a couple things I would say. So we've talked about a lot of things that are happening in the industry in terms of change and capabilities that advisor can tap into. I mean what we generally say though is, you know, as an advisor, as a firm, to some degree block out the noise, focus on the client segment or book a business that you serve really well and continue to do that and scale that in a really meaningful way. 

Really making sure you're smart about the ability to integrate the right product and services within that advice relationship. So when you go to a massive affluent relationship, you kind of deliver on your promise of the right investment product, banking and lending product as well. And then I think, thirdly, really thinking about how just the market is evolving with the aging demographics in terms of what consumers are wanting over the next 10 years in terms of advice, being able to flex and evolve what you're offering. For a lot of our clients, that means being open to partnerships, being open to different capabilities that when a client comes to you for something that's not in your four walls, you don't have to hand off the relationship, but you're able to holistically meet their needs.

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Day:

There's an idea that the most important thing to do with these relationships is build trust and confidence. What do you think is the root of that question of confidence and what's actionable in that space?

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Scott:

So, you know, what I find about, you know, a financial relationship, I mean, to state the obvious, it's often a very emotive relationship, one of the more important things in your life, but it also evolves and flexes so much over time. So the way, you know, the way I think about confidence is, you know, as an individual goes through ups and downs in their life, they feel like they always have an advisor who's giving them the same consistent level of service, the same consistent tenor of advice. And it's a bit of a foundational capability as they go through all the ups and downs. So that's how we think about the confidence and trust.

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Day:

I'm always reminded of the famous Elvis song, You Were Always On My Mind. That's sort of what an advisor wants to be, right?

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Scott:

Exactly, yeah, exactly. And it's hard to achieve that and replicate, but to our points up front, when you see that relationship really work and exist in a person, I think it's a really unique and compelling thing.

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Day:

Thank you so much, Scott. Really great to have you on the show. I wish we had many more hours to have these discussions and hopefully we can in the not so distant future.

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Scott:

Yeah, Day. It was great. Appreciate it and look forward to continuing to collaborate.

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Day:

Thank you.

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Summary of Key Takeaways:

Scott Reddel is a key figure in the rapidly evolving wealthtech ecosystem. He's been deeply involved with the Accenture Fintech Lab in New York, a platform that bridges major financial institutions with innovators.

Scott touched on some key issues that are driving change in wealth management. One is the evolving needs and expectations of clients. The modern client desires access, education, and trust. They seek curated insights and want to trust the institutions providing them and the challenge is to consistently meet these demands.

Another is the role of technology. While the vast majority of clients want a human touch in their financial advice, there's a growing acceptance of AI in the advice process. One key challenge he identified is the need to scale the balance of IQ (intelligence) and EQ (emotional intelligence) in financial advice. While high net worth clients get personalized service, the challenge is to provide similar quality advice to the mass affluent segment.

Scott also talked about the term "advice" and how it is evolving. It's not just about financial planning, but also about understanding a client's entire financial landscape. This includes insurance, retirement, mortgages, taxes, and more.

The wealth management industry is at an inflection point. With changing client expectations, technological advancements, and the need for a more holistic approach to advice, advisors and firms must adapt to stay relevant and continue delivering value.

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