How can tech help advisors manage volatility?

Narrator  00:00:03 

In this episode, hear what clients are looking for from their advisor to meet their future needs and how technology can help you meet these needs.  

David Kitai  00:00:11 

Hello and welcome to this special edition of WP TV where we are celebrating WP's Top 25 Wealth Tech Providers of 2024. My name is David Kitai, Senior Editor at Wealth Professional. Today we are lucky to be joined by Paul Kornfeld of SIACharts. As President of SIACharts, Paul is in charge of sales, marketing support operations, development and a wide array of other areas that the well tech firm touches. Paul is also a former Canadian National Swimmer and a former world record holder. Paul, welcome to WP TV. 

Paul Kornfeld 00:00:46 

Thank you so much for having me. I look forward to our conversation.  

David Kitai  00:00:49 

From your perspective, what do you think earned you this spot? Why do you think SIACharts was named as one of WP's Top 25 Wealth Tech Providers? 

Paul Kornfeld 00:00:51 

Great question. SIACharts has been around working with advisors in Canada in the US for for over 15 years, probably 20 years. Now, I haven't kept track of exactly the date. But throughout this time, I think we've just earned the trust of advisors through our relationships with them. There's been a lot of challenging times in the market over the last 15 20 years including a 2008 crisis 2022 or 2020 COVID pandemic, right. There's been a lot of difficult times for advisors. And SIACharts has been able to be a successful company throughout these market cycles, and help advisors navigate them through proven risk management and other tools so that they don't. So they thrive during these times, actually. So we actually started out as a technical analysis company, ranking Canadian mutual funds, I think we're actually one of the first in Canada ranking mutual funds, not just by performance, but an actual comparison against each other. And we've grown a lot from there. So we've diversified away from technical analysis to accomplish this through relative strength comparisons and rankings. And we've been known for five second analysis on any investment, and really can rank any investment against each other. We've been able to from the beginning rank of mutual fund versus stock rank rank of crude oil futures contract to an ETF, right. So it's, it's been an L of an evolution for our own company. But also, throughout the time with technology, we've been able to work with advisors to keep evolving our business throughout the evolving times as well. 

David Kitai  00:02:35 

Okay, that makes a lot of sense. You've hinted at one of my favorite trends in lines, sort of post 2008, but also since 2020. But everyone's crying elbow right here from advisors that year for my fellow fellow millennials, we just like to live in precedented times for once we keep going through unprecedented. So it might be nice for a little bit of normality. But as as you kind of say information is so key to navigating the unprecedented because there is at least some guidance and some foundation you can build on from from that information. So being that provider of an information and analysis tool, what are you hearing from advisors about what they want from a well, tech firm in general, and then from an information and analytics specialists like yourselves in particular?  

Paul Kornfeld 00:03:21 

Yeah, I mean, obviously, advisors are not short on opinions, they want a lot, and we're happy to provide that for them. We can't provide everything, we're not going to be an expert in everything. But what we're trying to do is just be on their side, just give them a tool that, you know, is is for them. And for their business, we want to help them grow. Just this week, I was or I guess last week, I was helping an advisor try to close a large, you know, five plus million dollar client, right? That's not what other well, tech firms, I don't think are are trying to do. But we truly are trying to partner with them. We're hearing more at the major banks that their fees are going up and support is going down in many cases. So I think advisors are looking more to well tech fin tech firms to fill that gap and be that kind of maybe secret sauce, competitive Vantage, whatever you want to call it, but just somebody on their side a lifeline for advisors that need a partner in this business. So we aim to continue to evolve as we partner with advisors to do this. So we want to create a full market intelligence platform that started off from a technical side, moving into the fundamental side, moving into compliance side moving into the marketing, which we already do for advisors to help them tell their story, help them grow their book of business, we aim to be that place where they can get all the research all their compliance needs, all their marketing, portfolio management, modeling, you name it, we want to be that we know we won't be the best in every area. But we hoped by the integration of those tools and features. Advisors can come to us kind of with that, that full solution as much as possible. So they're going to need a system that listens to them but also stays current with the challenging markets and adapting through the time. So we've also committed to being that technology company. And we are a technology company, first and foremost. So we want to continue to advance through the times by being on their side. So that's, that's really the main thing is we do listen to our clients, we are trying to hear from them. And we're trying to evolve our business as as the demands go up as well. 

David Kitai  00:05:25 

Evolution of your business is always so interesting. And you started of course, with like, it was initially just mutual fund rankings. And now there's so much more sophistication in what you can do. But moving into areas like compliance moving into a lot of the other kind of particular operational areas of an advisory practice and try to support them with that. How do you eat within your own organization kind of staff up for that and scale up for that in a way that you know, you're you're entering in some ways, new territory, but you're you're you're trying to grow your business? What are some of the sort of key sort of steps you have to take as a leader to ensure you're doing that without overstretching all at once? 

Paul Kornfeld 00:06:03 

Yeah, it's challenging because you only have limited resources, you can only focus on certain projects over time. So I mean, one of the ways we beat up is just technology staff, like we're investing in, we're hiring more programmers and salespeople. So you might, a lot of people may be watching this video, haven't heard of SIACharts, because we're never going to be the biggest sales department to the most marketing and ads. What we are trying to beef up is our technology, we're buying more servers, we call our own server infrastructure, ourself, to process all the 80,000 investments on our system, and the hundreds of millions of comparisons we do every night, just to create these rankings and analysis. So that's where all our money is going, is in the tech side, best, again, new servers, GPUs, all these things to try to create a little bit faster tools a little bit better research a little bit better outcome. Because we know that if we are successful in helping advisors with these signals with these, this research, it's going to help us, they might not actually want to tell their friends or their their colleagues, they'd like to keep it to themselves, but it is going to, again, hopefully have us back on this every year, because of our commitment to the advisors. So we've been really beefing up the technology side, we've always been a technology company first and foremost. And then it's just a technology company that moves in different directions. Plus, now we're trying to customize it more we understand that each advisor is unique. So being able to customize different strategies for each each advisor is kind of the core of what we always try to do. But now we're trying to take a step further saying, okay, there really is a million different ways you could go with this. But here are some sample models to point in the right direction. But also, if they want to do something just unique for themselves, we can also partner with them, their book of business to again create products or create different strategies for them as as they grow and evolve to so we understand that there's not a set in stone 6040 model anymore, there's going to be a million different combinations of those different strategies for each different risk profile of their clients. And each advisor we talked to is different and that's part of the fun. I'm very blessed to be in this position because I get to talk to different advisors every day that that have different challenges and different needs for their clients. 

David Kitai  00:08:18 

I'm just curious let's let's go back in some ways to the the nuts and bolts, the original sort of focus of SIACharts, which is that investment analytics and comparison. volatility has been the the watchword of the past three years, again, unprecedented volatility it to use the other one. And we keep running into it in sectors where you wouldn't expect places like fixed income, or just other aspects of the market are on weeks and months that shouldn't be happening. So what does your kind of core tool that investment analytics capacity? How does that help advisors navigate their clients through this kind of volatility that we're seeing?  

Paul Kornfeld 00:09:00 

Yeah, so kind of coming back to the core we do. SIA just analyzes and compares money flow. So we get down to economics one on one, right, we're comparing the supply and demand between any two investments, we start up off at a very high level, just money flow of the equity markets. And we try to answer just one question should we be in equities or should we be looking elsewhere just that simple. We've created a kind of a green light red light situation of like, hey, but on the gas, you know, you're driving you're cruising down the highway. That's where we are right now. We'll place this recording we're still there and in a couple of weeks. That's kind of the the situation where we want to keep advisors in the market most of the time and 70% of the time we're in that that environment over the last 15 years. But there is times when you're driving you need to slam on those brakes you need to slow down to curb ahead or there's an animal's throat or there's a red light right. So that's that's the key to kind of first and foremost, helping advisors from a top down approach, the number one area that you can add the most value for advisors is in the kind of asset allocation of their book of business for their clients. It's not on investment selection. So we first and foremost start there, because especially the higher net worth clients that advisors will have. Having great performance isn't actually what they're going for. They're trying to protect their hard earned money that they've invested their whole life and their business or their family inheritance or whatever it is, that 10 million, or whatever that is plus, they're just trying to keep that money first and foremost. And that's, that's what we try to do for all our clients is give them a risk management tool, just to help them understand kind of what risk are we in the markets, we don't know, again, if it's a 2008, where it's going to be a 16 month kind of bear market? Or if it's a 2020, where it's a, what, four week bear market or something right, the fastest bear market in history, right? So, again, our tool isn't designed to predict anything, but to follow the money flows, institutional money moves, what 80 90% of the market, right? So the advisors are actually a smaller part of that, and retail director, retail are just individual investors are even smaller part of that as well. So just by watching the money flow, the big black rocks, the sovereign funds the world, you know, it takes longer for that money to move in and out. But by monitoring it, you gain a lot of insight. So that's one of the keys to our success is just following the money flows. And with that, we can take it a couple steps further than we could look at the asset class rankings and say, okay, one simple question, should it be in US or Canada? Well, it's easy to say that maybe looking back, and but in the time, it's not always as clear, right? There's there's reasons for each of those opportunities, or, Hey, maybe we should be in emerging markets or in China or Europe or Middle East? Probably not right now. But, you know, like all these sections of the world we can we actually measure against each other and try to simplify as well saying, hey, last year, we were in US equity over Canada and international guess what, last year, all the equity markets did pretty well, except for China. Yes, but that would be the one area where you'd help stay away from but the US equity was up 24% last year and the s&p 500 or over 40 43% and the NASDAQ Composite, right. So that was where we were pushing advisors to help them have that great, hopefully outperformance just by that one analysis versus the Canadian markets up only 8% last year. So that simple analysis of just Yeah, most people are staying in the market, but even another layer of saying, Okay, here's where you'd rather overweight or underweight then again, we'd go a step further and say, Okay, what sector should we be? Should we be in? Maybe semiconductors? Maybe technology? Absolutely. Right. That's where we've been investing in our energy lately, right? Or materials like those, those things that again, we don't, we don't come on BNN and say, hey, you know, this is what we believe. And we're gonna be a value investor for the next five years, we might be a value investor for six months, and then a momentum investors, then emerging markets investor than a technology investor, right? So we're always trying to just follow those money flows. Sometimes those predictions, the fundamentals, all align and make a really strong signal. And other times, we're going to be maybe contrarian to what the markets doing. So I kind of we kind of talk about four pillars of analysis with their advisors, first, foremost, risk management on the top, should we be in equities or not, that we go to the asset class rankings and help them understand and stay away from a 6040 portfolio like 2022, the worst year on record since the 1930s. Right? So we're actually saying get out of fixed exchange, like this is not a popular take for most balanced investors. But it's one that's added a lot of value just in the last couple years. So our clients are very happy with us from that standpoint, because hopefully, we're just outlining them where the best opportunities lie. So then the third pillar is that sector analysis we talked about, and then we get into the individual analysis as well to say, hey, maybe you should think about in video over, you know, what other stock are staying away from at the time, right? So those that's kind of the the core of what we do of where we started, then that helps us kind of navigate a volatile market. And it's been very successful over the time, and then every, every volatility, everything that we see, we learn from that. And we're able to even adapt and improve our technology going forward, especially from the risk management side, because I think the signals sometimes do need to be a little bit quicker. Not everybody wants a six to 18 month outlook for markets when it's tanking or things like that. So really, to summarize everything I just said, all we look at is opportunity cost. So David, if you've had one stock to invest on right now, if you had $10,000 to invest, we can tell you where the best place to put that money is that's the opportunity with our system is we're comparing everything against each other to point you in the right direction saying hey, you could invest in this technology stock or this energy stock. But what about something else you didn't think about? What about this? What about Netherlands ETF, you know what I mean? Like, there's always these other areas that you can put on in which it can be almost overwhelming sometimes. So we try to take that out of the kind of, yeah, we take that out from advisors, things xiety In a way to say, Hey, you don't have to manage everything, you don't have to have analysis and research and everything, we're trying to simplify this as much as possible and point him in the right direction. And then really, that comes down to an opportunity cost analysis. 

David Kitai  00:15:31 

That is a great answer. And just a great kind of comprehensive view of of the power of a tool like that. All I can say is, as someone who probably bad to say it on this channel, but self direct some of his investing. Boy, I wish I had that when I'm staring at my Wealthsimple page, and my eyes are going a little blank. But it is really fascinating to see how much detail you can pull out and how that direct comparison and to trade it off. And I liked the use of opportunity cost as well as kind of a core framework by which you're doing this work. So, you know, you've demonstrated this in a lot of ways, and you've already made this point. But just to lay it out explicitly, and in some ways in brief, how can your technology help advisor set themselves apart, and that includes what we just talked about the the investment analytics side, but also include some of the stuff you're building out now more on the operation side. 

Paul Kornfeld 00:16:26 

We want SIACharts to be that competitive advantage for that advisor. One of the ways we do that, and I'm probably nobody else you talk to on the world tech side, I don't think that they do this is we're only available to licensed professionals licensed Investment Advisors. Most other wealth tech FinTech firms aren't actually about just the advisor, it's kind of one of the things we did right from the beginning, we'd be a lot bigger company if we didn't do this. But what we're really trying to say to our clients, and again, have an example of this, is we truly want to partner with the investment advisor, and give them an advantage. So their clients can't go around their back and get the same tool, the same research somewhere else. I guess, technically, most, most people can get a lot of this research online sign up kind of an individual standpoint, but they can't actually go around advisors back and sign up for our system, we say no, you have to work with advisor can you ever be or whoever we're working with. So I think that's one of the things that just sets us apart is we truly on the adviser side, we're trying to partner with them and give them a tool they can't get anywhere else. And all the tools and analysis we build. Because of that is built for them. It's not built for multiple people. It's built for their needs, their wants their complaints, their their changing environment. So that's why we've launched a Kyp tool to help with compliance that their clients don't need, but they need to help with their needs going forward. Second, we hope we're just a leading analysis of firm who started with relative strength and is expanding for the advisor as we go. And so that's again, what we have been built off of. And we're trying to again, keep advancing our research our data, I can't tell you how much data I bought over the last couple of years, that seems to be the new currency out there, because there's that demand. So now we have real time news. Now we have new real time features that we want to get into the hands the information as quick as possible, so that they can make the best decisions for their clients. Couple other things that people told us about or we've been recognized for is really timely alerts. Most of the research out there is on the buy side, right? There's 90% I don't know exactly the percentage but a lot more buy side research than sell side. And we've been really known for a time to get out of valley in pharmaceuticals time to get out of work back in the day, some of these big blow up of companies, right? We we've helped advisors stay away from from names that can blow up a whole portfolio, you could have nine out of 10 companies are doing great, and that one is dragging you on that performance. So what our system is really good at is just helping stay away from that, that one stock that you probably shouldn't be in right now or that one ETF or that one mutual fund. So that's one of the best I think things is we have those alerts that help people identify just when that opportunity cost is changing. It's not, it's not a sell or buy signal. It's just saying, hey, there's better opportunities out there, why wouldn't we move that money to where those money flows are going. And so that's why we've tried to simplify all this to saying like, Hey, we're just an opportunity cost ranking system. And yeah, you can take a chance on this, but probably the odds are not in your favor right now. We'd rather follow the smart money as we call it. where that is. And then, like I talked about earlier, we want to help advisors with custom strategies, custom tools, so we're continuing to develop more tools around that to back test to strengthen their resolve in the strategy that they're implementing for their clients. So I think that's kind of what hopefully is set us apart is that commitment to advisors, hopefully strong risk management, timely alerts and the kind of custom approach that we take with our business knowing that no two advisors are different, or sorry that every advisor is. 

David Kitai  00:20:07 

You mentioned a lot there about the advisor, obviously, and about what you're hearing from advisors and the demand that's that's being met. But of course, advisors are the ones who are sort of facing with their clients. And, and in some ways, as a final question, I guess, in all the ways you've evolved your business, and all of this sort of the engines for growth and the approaches you're taking to make as HR, it's more of a full service provider. What's next? And by what's next, I kind of mean, what are you hearing clients are expecting from their advisors that you're now going to try to meet?  

Paul Kornfeld 00:20:42 

Yeah, great question. Because we're not short on opinions, like I said, from our advisors. And that's, that's one of the things that we start with is just listening to them, right? Like, it is true how we do that is maybe different than other companies as well, everybody our kind of our highest level or professional level of service, get a dedicated account manager that's following up with them, hopefully, on a quarterly basis, maybe at least semi annual basis, to hear them and you know, we have a helpline and stuff where they can actually calling in and talk to somebody. So not that again, other ways of doing that isn't, isn't better. But again, we're not the biggest company in the world that we actually want to stay that way, we actually don't want to partner with 10s of 1000s of clients, we actually want maybe 1000 tops or something like that, we actually, we want to be kind of a smaller niche firm that is really dedicated to those partners using the tool. So it's a different kind of business setup. But that enable us to have those kinds of conversations, really listen to the needs of clients, and build off of that. So building new features and tools for what they actually need. And anticipating that a little bit through, you know, for example, new compliance needs like nobody was asking us for this, but things change from a compliance standpoint. So we created a new your product development, that's, we think is going to be a really powerful tool that integrates in with everything else that they're doing. Hopefully, with some of the best in industry, peer comparison reports and recommendation tracking. And then again, the automation part of it is what a lot of advisors are asking for not only in this but other areas. So that could be through AI tools that could just be in timely alerts that actually give them the answers they're looking for, or in this case with Kyp compliance is not sexy, but hey, just remind them on a yearly basis or material changes, they don't need to do that anymore, the system can help them do that and all their other compliance requirements. So we're very excited about that kind of rollout. Because that's an example of both listening to clients anticipating the needs of the changing industry standards or requirements, and building out further things like that. The other main area that we're evolving with, like I said, it's just integration of fundamentals, financials, economics, you know, those kinds of things that we want to take a different step and say, Hey, we are that full market intelligence programs. So that's what I'll be spending the rest of my year on, is building that out, and then hopefully, create a great product that any any advisor will, will fit in with, because we've been, you know, a lot of people come to us with outside research that's great integrated with our system provide that overlay on top of it, we want to be that system that hopefully can do it all for them. They can still bring their own research in, but at least they can come to us with with that. So that's kind of where we're moving. And then of course, you know, this answer could change in three months if there's new demands, or new new areas with that, but definitely focusing on innovation on the needs of our clients. And you know, a lot of people might say that, but also automation tools, AI tools that can save people time and actually give them results. Like you can create AI tools that really don't do anything that look different. But can they lead to things where advisors can't do it themselves or those kinds of things is where we're focused on so not just creating AI tools just to do that, but to really implement in areas that we wouldn't be able to do ourselves. So especially on the back testing side of things creating AI tools, right right up front within that is a core focus for us right now as well.  

David Kitai  00:24:10 

Big goals, big ambitions. But you've you've met and exceeded those targets before and we've recognized it before and we're happy to recognize it again. So all with that. Unfortunately, that is all the time we have but I just want to say thank you so much for these great answers and congratulations to yourself and to the whole team at sa charts for being named to the Top 25 Wealth Tech Providers for WP TV. I have been David Kitai thank you so much and have a great rest of your day. Bye bye