The rate of change is leaving some advisors on the outside looking in, stuck with a belief that updating their tech stack would be too onerous of an ask for their staff, according to speakers during a panel at WealthStack.

Milemarker CEO Kyle Van Pelt said advisors or CEOs should be able to concentrate on the responsibilities of their roles, without taking on the responsibilities of also being a part-time chief technology officer.

“I’ve talked to CEOs who said, ‘if I went in and asked my operations team to change all of the technology they’re using in one fell swoop, I’d have a mutiny on my hands and everyone would leave,” he said.

Adding to the challenge of modernization is that tech integrations remain “very inefficient” for firms and third-party vendors alike, according to Oleg Tishkevich, the founder and CEO of Invent. While vendors try to create unique experiences and services for firms, Tishkevich worried that this means they are being asked to repeat identical functions and services for each, unnecessarily increasing their own workload and adding to the complexity of the ecosystem.

“Everyone is building their own stacks, a universe of multiple suns, in which everyone tries to create their own … and see if they can gravitate some planets towards (them),” he said.

Tishkevich felt the race for a client experience “silver bullet” stems from firms realizing they cannot really differentiate themselves with relatively commoditized services like model portfolios and portfolio management. In a separate WealthStack panel, Bullis agreed, calling such strategies “one-dimensional and static.”

“Risk scores and model portfolios should be dragged out back and shot in the head and burned to death,” he said. “I think digitization is the trend driving the requirement of personalization.”

Though firms may resist pulling the trigger on big tech changes because of the work entailed, MyVest CEO Anton Honikman cautioned they faced “real obsolescence risk” if they didn’t acknowledge the need to modernize. After all, the same wave of digitization in financial services means the costs for clients to switch advisors drops dramatically.

“What happens in wealth management when your clients can leave you with the click of a button on their smartphone?” he asked.

Breaking from past strategies extends beyond tech; XYPN co-founder Michael Kitces, presenting research his firm conducted on growth levers in RIAs, stressed that the industry’s “growthiest” firms relied the least on client referrals, traditionally RIA’s most widely cited “growth” tactic.

Referrals aren’t disappearing at successful firms, but the revenue from “growthier” firms’ marketing spends obliterated the revenue generated through traditional referrals, Kitces said.

As with firm principals taking on the CTO role, Kitces said firms that relied on advisors to “market themselves,” via referrals or otherwise, drained costs for the firm as those advisors who are good at it become more expensive to recruit.

“The more we pay advisors to service their existing clients, the more expensive it gets to pay them to get new clients,” he said. “And it literally starts breaking our marketing.”

Nitrogen CEO Aaron Klein agreed, saying he didn’t know of another industry thrusting practitioners with finance and economic degrees into the role of “growth engine” for the firm.

While strategies for helping advisors drive growth were akin to “the Wild West,” Klein believed high-growth firms are finding ways to help good advisors grow their client base without putting the onus on those same advisors to grow additional relationships, avoiding a strategy that turns advisors “into something they don’t want to be,” namely.

ESG and cryptocurrency have both been areas of focus and controversy this year, but in separate panels, speakers urged U.S. investors not to use the recent headlines as an excuse to dismiss the strategies as fads and fall behind in these spaces.

While anti-ESG sentiment has percolated in U.S. political rhetoric (particularly in the race of the 2024 GOP nomination for president), Honeytree Investment Management Co-Founder Liz Simmie believed ESG strategies would benefit in the long run due to the increased scrutiny—even if the current conversation around it is “a hot mess.”

Luke Oliver, a managing director and head of climate strategies at KraneShares, argued that betting on investments in renewables wasn’t an aspirational, values-inspired cause, but was a bet on reality and the future evolution of policy and industry. Last year’s U.S. Inflation Reduction Act boosted the country’s spending on renewables by more than $350 billion, with China investing $500 billion in renewables last year, and the European Union launching its own $288 billion gambit.

The result was that an “arms race” in renewables was underway, according to Oliver.

“If you believe and think how you’ve always thought as an investor, you want to get into these environmental plays because that’s where the money is,” he said.

The U.S. risks falling behind in innovations in the crypto space, according to speakers at a panel on crypto; Mango Digital Strategies CEO Charlene Hill Fadirepo said the U.S. had “almost lost the game” in crypto innovation largely because of deteriorating relationships between exchange owners and regulators at the Securities and Exchange Commission.

It may come to a point where CEOs of crypto exchanges may opt for international destinations like Dubai or Malta, which Fadirepo claimed were positioning themselves as crypto hubs with attractive tax environments.

“If you have the money to fight, and the energy and resources, you’ll fight,” Fadirepo said. “But if you don’t, you’ll pivot and you’ll just go to the Caribbean.”