It’s Time For A Change

We are in the middle of a major shift in the world of finance, and the writing is fairly plain on the wall.  It wasn’t long ago, before technology indelibly changed the way trading is done, that as an investor your choice of investment firm had direct consequences on your portfolio’s performance.  It was during these times that firms like Goldman Sachs made such a name for themselves – you invested with Goldman Sachs because you make more money.  Simple.

Today, in a world of trades measured in nanoseconds and online day trading at the fingertips of anyone with the interest to do so and $10, this has fundamentally changed.  No longer are firms offering up superior returns to their competitors because, frankly, they just can’t anymore – and everyone knows it.  So, this leaves firms with two choices:

1) Become a low-cost provider and do battle with the likes of eTrade and Charles Schwab, or
2) Provide the highest level of service and live up to the promises made in their commercials of truly getting to know people and deliver highly personalized investment theses and so forth.

It is not hard to see that by 20 years from now or so, every firm will be forced to make this decision.  Neither choice is better or worse, but most firms pride themselves on providing client services and therefore view themselves as superior to the eTrades of the world.  Long story short, there will be no space in the middle to charge fees for managing accounts while still providing less than stellar services.  As such, it is incumbent upon firms who envision themselves as personalized service providers, and who often sell that value as their lead differentiator (despite the irony that all firms are pitching the same value), to figure out models of personalized service beyond the current offerings.

Clearly, we at DyMynd envision ourselves as part of that paradigm shift, but it goes well beyond us as well.  There will have to be far superior solutions to tailor accounts and interactions with clients at every level of the firm and for every process within them.  In all, change is afoot.  Firms have slowly been awakening to this reality, but have been slow in the incorporation of the changes necessary.  Further, as women, minorities, and other groups continue to represent ever larger segments of the investor population, and therefore demand different models of service, the need for this fundamental change in finance will only strengthen.  It will be interesting and exciting to see how it will all play out.  Who, on one hand, will adopt authentic change and who, on the other hand, will find themselves in the dustbin.