How Lynx Investment Advisory Delivers on the Modern RIA’s Dual Mandate of Advisor and Financial Therapist

• Technology offers the ability for continuous improvement, which is integral to survival in the digital age.
• Access to financial and market information has never been greater, but has also underlined the need for client education.
• The nearly ubiquitous access to data and information has necessitated that RIAs increasingly play two roles: financial advisor and financial therapist.

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.

How do you see the wealth management industry evolving in the coming years?

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.

As a firm, when did you begin to notice the pressing importance of adopting new technology?

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.

In that vein, how has your firm embraced new technology and what role does it play in your practice?

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.

How do you work through a situation where clients are not very adept with technology?

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.

How are you thinking about AI?

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.

How do you manage client expectations and emotions in a volatile market and ensure that they're staying on track with their financial goals?

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.

Do you see any differences in this anxiety between newer clients and veterans?

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.

What's the toughest question that you tend to get from clients and how do you answer it?

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.

How do you ensure Lynx stays current with industry trends and advancements? How do you share that information with your team and make sure everyone is on the same page?

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.

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