In this exclusive series, we ask top RIAs from around the country to share their biggest challenges and successes from the past few years. You’ll learn how they’re overcoming the unique issues facing our industry today and glean insights that may be helpful in your own practice.
This article features Lynx Investment Advisory’s Vipin Sahijwani and Lara Hines, who share how they are adapting to new technology and the advent of AI in an information-saturated environment to deliver for investment clients.
Over the last 20 years, technology has disrupted every industry, as well as our day-to-day lives. Within the financial world, technology has changed the way we invest, democratizing the process and granting practically everyone access to information, tools, and markets that were once available only to institutional investors. While access has many positives, it can also create a very dangerous landscape by making everyone feel that they are experts when often they lack a full, nuanced understanding of a given concept or the implications for their particular portfolio.
All of this means we, as investment advisors, have to evolve. How can we survive and add value in this changing landscape? Our role in educating clients today, for example, is much bigger than it used to be.
Another massive change is in how people look at investments. Technology has broadened clients’ perspectives when it comes to the impact of their investing. While they are still interested in generating returns, they often want to maximize value to society and implement more thematic investing strategies. These conversations are happening increasingly in our client base.
We’ve thought about this for some time. You know how, in Darwin's theory of evolution, a genetic modification arrives at some stage, and that genetic break accelerates the whole process? We think that's what happened with the financial industry during COVID.
The prior technology bottleneck was not the availability of information, but the ability to execute on it. During the pandemic, retail investing apps provided the average investor with a full range of tools through which they could execute trades and portfolio changes — creating a dangerous new era for the markets, to be honest.
We always ask, where do we think the industry will be in five years? And why can't we be there today? We call ourselves a 27-year-old startup. We don’t ever want to stray from that kind of culture where you question everything and continuously strive to improve.
For example, we’re currently developing technology that allows clients to access their reporting systems, tax documents, and whatever else they need in one mobile-accessible portal.
Moreover, we’re leveraging technology to make internal systems smoother. For instance, we scrapped our phone system in 2018 and transitioned to internet-based video calling. So we were ready when the pandemic hit.
Technology has also enabled our performance systems to be much more efficient. This, in turn, has been a great benefit given the challenges presented by our uniquely diverse client base.
Lynx takes immense pride in making life very easy for our clients when it comes to operational support. That sometimes means giving tutorials on how to use an app or taking a cab to a client’s house to get papers signed. We always try to work within the client’s technical comfort zone.
As advisors, 90% of our role is to avoid type-one errors — that is, you can't let clients shoot themselves in the foot. We apply that same way of thinking to AI. We’ll all be dinosaurs if we don't stay on top of AI’s development and incorporate it into our operations at some stage in the future.
Humans are limited by their imagination when it comes to AI and the role it can play. Think back 20 years. People gain access to internet search for the first time, and what’s the first thing they do? They have the entire internet at their disposal — and they look up their own name!
We don’t think we are yet at the stage where AI tools can be of great use to advisors. But, with AI’s constant evolution, we fully expect we’ll not only be using AI ourselves but may eventually be competing with it at some point. The only thing that will limit us is our imagination.
People today have more anxiety about everything, not just financial wellbeing. Over the past 20 years, financial advisors have largely taken on the added role of therapist. In other words, much of the job is now listening to, educating, and comforting clients on their anxieties around headline-making macro issues, be it inflation, deflation, COVID, the banking crisis, or — as a client inquired about just this morning — China.
We are also more transparent now than ever before. Clients today want to see how much of their return is coming from allocation decisions, how much is from selection, and so on. These are all things that used to be on our back pages.
The difference is that, unlike newer clients, those who have been with us for decades know our track record and feel comfortable that we will be able to successfully navigate through times of distress. Plus, the extraordinary longevity of the team — one that’s still rooted in the same philosophy the firm was founded on — is a major source of comfort for long-term clients.
We take a journey with our clients. We start as an advisor, and for many of them, we become a trusted friend. Many of those relationships are ones we fully expect will carry throughout our entire lives.
With the newer clients, the toughest question is: How much return can you generate for me? We’ve never figured out the right answer to that. You're knocking on the wrong door if you want a guaranteed return.
The right question, and where we try to steer the conversation, is: What are your goals? And how can we help you attain them?
There are also situations where a client will initially say they’re risk averse and then ask us about a risky investment: “Why am I not in this?” So when we meet clients, we never measure their risk tolerance. We will only observe their risk tolerance. It's a trial-and-error method.
Our best educators are our clients. They have skin in the game, and they keep us on our toes. Our clientele includes politicians, professional athletes, every kind of doctor you can imagine, and organizations and associations that touch on a full range of sectors — including education, aging, and the arts. All of our clients have fascinating things to share from often diverse points of view. Applying what we learn to our operations overall has helped us to survive and thrive.
Beyond that, though, the key is building the right team and retaining them — it’s very upsetting when anybody resigns. We ensure robust internal discussions for exchanging knowledge, for instance, with a weekly meeting between our research team and advisors.
It also helps that we’re a DC-based firm, so everyone in the office is a news junkie. In this city, everybody is trying to connect, and nobody really cares what your political affiliations are, because we're so used to hearing every side and having these conversations. It’s really cool.
Vipin Sahijwani joined Lynx in 2007, bringing over 20 years of experience in portfolio management, investment modeling, market analysis and econometrics. Prior to joining Lynx, Vipin was a Portfolio Manager at the hedge fund Arithmetrics, LLC, and a Senior Investment Analyst at Riggs Investment Advisors where he was a key member of the portfolio management team, managing a top quartile small-cap equity portfolio.
Vipin holds a CFA charter (Chartered Financial Analyst) and a FRM Certification (Certified Financial Risk Manager). He received an MBA from George Washington University, where he was awarded the International Student of the Year, a Master’s degree in Market Research and Forecasting from the Center for Management Development in India and a BA in Economics from The University of Delhi, India.
Lara Hines joined Lynx in 1996. In addition to her supervisory duties, Lara has administrative responsibility for the Lynx Global Real Asset Fund.
Lara has spent her 25+ year professional career in the financial sector in various analytical capacities. Prior to joining Lynx in 1996, she was a junior analyst at CRI Media Partners, a limited partnership in New York City, specializing in media and communications investments. Previously, she worked in Corporate Finance and Research at Gilford Securities, Inc., a boutique firm, also in New York City.
Lara holds a BS in Finance from Fordham University.
Lynx Investment Advisory is an independent organization and is not affiliated with State Street Global Advisors or State Street Corporation.
The views expressed in this material are the views of Vipin Sahijwani, Lara Hines, and Lynx Investment Advisory through the period ended September 30, 2023, and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Investing involves risk including the risk of loss of principal.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
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