Quarterly reports are not new or novel to the financial services industry. Despite that, a majority of investors still don’t know what they actually own in their portfolio, according to David Connor of Investsuite.
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With 35 years of industry experience, including time spent as an advisor, Connor has seen clients leave meetings supposedly informed, only to return the next quarter with the same basic set of questions. Advisors navigate a lengthy and time-consuming process prepping for those meetings, just to find that the delivery of performance reports is a weak link in the client-advisor relationship.
Connor says Investsuite’s Storyteller Suite software sets out to remedy the problem. To build the system, Connor drew on the experience of other advisors to develop a product that combines portfolio numbers with a narrative component, providing interactive, dynamic quarterly results in the more traditional PDF format, as well as in video or personalized podcast formats.
Launched earlier this year, Storyteller is a relative newcomer to the industry with over 5,000 users, including Standard Life, which is the largest provider of pensions in the UK and Europe and accounts for nearly half of its client base.
The below interview has been edited for length and clarity.
Financial Planning: What was the core mission behind Storyteller’s design?
Dan Connor: The mission was always to make it very clear and easy. There are a lot of different ways of looking at how a portfolio is made: the sectors, regions and a whole host of different factors, so we wanted to make it very clear. Some of the lead design was around sectors and then asset classifications, so it would be simple for the client to understand: this is a large-cap company, or this is a small-cap stock. We made it very clear and grouped it into categories to make it easier for them to understand.
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FP: Why is storytelling an effective teaching tool for investing?
DC: It’s how people learn. If you go back, it’s the reason there are parables. It’s the reason that, for centuries, people have been told stories to help them understand the past and use those lessons for the future. Storytelling is everywhere. Why not use that in something as important as someone’s investments? Stories are the best way I know to accomplish that.
FP: Why use a “hero and villain” narrative structure?
DC: We try to mirror the art of storytelling. To create this sense of a story, we use a hero and a villain, so clients see this as their own journey, since so many hopes and dreams are tied to investments. People invest for all sorts of reasons, and when you look at what investments do, they give clients more opportunities. We wanted to tie this very closely to the art of storytelling, so that they can understand this is a journey, quarter by quarter.
FP: What qualifies as a “hero” in a portfolio?
DC: A hero is something that has a strong positive return, and we anchor that there because you always look for a bright spot in anything. Every quarter, even if it’s down, will have something that either lessens the decrease or proves to be something they really should own.
Standard Life is the largest pension provider in Europe and the UK. They conducted a study that included 600 participants. Three hundred of them got Storyteller. Three hundred of them did not. After a three-month period, those who received Storyteller saw a 30% increase in contributions.
FP: What did you learn from the Standard Life study?
DC: As the client gets more educated, they’re more comfortable, more engaged and more likely to grow AUM or contribute more. In the case of Standard Life, we’ve also got a handful of RIAs here in the United States using Storyteller, and the feedback we’ve gotten is that it keeps the conversation going, since many advisors use the web version when they’re actually sitting with the client. So everybody’s on the same page as you go through the report and highlight different insights.
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FP: How does client education factor in?
DC: People will start an investment account, put money away and let the advisor build out the portfolio. Very often, what happens is they don’t really truly understand what that portfolio consists of. They just assume that the [stocks in the portfolio] are the right ones to be in, and that’s not always the case, and that’s why we have suitability profiles.
I would say 8 out of 10 clients don’t truly understand what they own or why, which makes it harder to put more of a human spin on a particular stock. When I was an advisor, I used to tell people who were new to investing, “Look, you’re using these products every single day.” Whether it’s Colgate or Starbucks coffee in the morning, a day in the life type of thing that they do every single day. They knowingly and willingly are contributing to the bottom line of these companies, so why not own some of it and take in the increase? And so that’s how I would explain stocks and why you want to own shares of a particular company, because these are products that everybody uses every single day.
FP: How does Storyteller integrate AI responsibly?
DC: We’re using AI, but it’s deterministic. So we’re using existing data from the portfolio from the tech stack that the firm has its CRM, portfolio management system and all the information. We’re not going outside of that. We’re staying with that. And they can also configure that even more tightly. So that’s how we’re safeguarding against AI. We don’t use many outside sources.
From a broad perspective, AI is automating many functions within the industry, allowing advisors to focus on what they really need to focus on: the client relationship. As long as I’ve been in this business, and as long as it’ll be around, the most important thing is the client relationship. Each client is unique, and each portfolio should be managed accordingly. What used to happen was that people were placed in mass-produced portfolios. So now, AI enables personalization at scale.
When we actually generate the content, we don’t use AI. We have a text database with thousands upon thousands of scenarios built in based on the attribution, because there are really only two ways it can go: up or down. But there are many nuances to that. So we’ve built out scenarios, and when we actually create the story, it’s pulled after we run attribution and the news algorithm to get relevant content on the instruments. We then piece together the story for the advisor to talk through with the client. That database can be pre-approved for compliance reasons, so we’ve eliminated the risk of hallucinations or of it saying something that is not allowed.
FP: How does Storyteller relate to the “great wealth transfer”?
DC: Everybody talks about this great wealth transfer that’s going to happen, and in my opinion, I think we’re already seeing it. But for the good of the industry and for advisors, if they can get the generations within a family interested in and understanding their investments, the better off the advisor is at keeping that relationship. But also, the clients are better served because now it’s an intergenerational discussion that usually never took place in the past.
