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Just-In-Time Wealth Management: Applying Toyota’s Timeless Lessons to Modern Financial Services
Immediately following World War II, Japan began widespread reforms. The 2,608-year-old nation of industrious, culturally rich people had to find its way to international relevancy after the unconditional surrender to the Allied Forces.
The financial difficulties of the occupied country led Kiichiro Toyoda, the Founder and President of Toyota Motor Company, to resign from his namesake organization.
As a company, Toyota was in pure survival mode.
Taiichi Ohno, Grandfather of the Toyota Production System
With a deeply troubled company and a limited supply chain, Taiichi Ohno was a production engineer who was forced to find a new way forward.
After studying the American Grocery industry, Ohno invented a concept that would not just revive Toyota but forever change the world.
Just In Time (JIT) Manufacturing
Taiichi Ohno is the founder of Just-in-Time (JIT) Manufacturing - a concept that turned weaknesses at a given moment into timeless virtues. JIT created a low-cost, highly organized and efficient production process to address Japan's shortage of capital, storage space, and natural resources. Toyota stopped holding excess inventory and only produced parts that were going to be immediately used.
Every part had its destination in the form of a purchased vehicle. Waste was minimal, and the core operating philosophies surrounding this pivot led to the discovery of dozens of engineering principles that guide how so many things, from cars to spaceships to code to logistics, are managed today.
Principles like Kanban, Supply Chain Visibility, Kaizen / Continuous Improvement, and Andon or Signaling are all bi-products of Ohno’s leadership and thought processes.
The WealthTech Supply Chain is Broken
Looking at most wealth management firms, we often find many tools, apps, and must-haves at different levels of use and relevance.
Like an unoptimized factory, some solutions are overworked, underutilized, or living on islands. To a large degree, firms have either too little technology or too much, depending on who you ask.
Similar to Toyota’s post-World War II assembly process, your firm likely has a lot of parts sitting around. But unlike Toyota, most wealth management firms are still left to count on their suppliers to build their cars.
This leaves most wealth management firms handing out a dozen or more logins that are hard to manage while you continually dedicate more resources to support them.
Where Wealth Management Can Adopt JIT
For wealth management companies, there’s a wonderful emergence of companies that can now apply the core principles of Just-in-Time Manufacturing to their evolving processes.
For a long time, the adoption of these methods was more exclusive to processes and left for firms large enough to have software developers—if they knew how to lead them.
Today, I am witnessing firms start to take the materials/software they have licensed, extract the data they contain, and assemble insight and information that is being directly applied to how decisions are made and how the business is run.
Key Use Cases
1. Single Source of Truth
Firms can now focus on information that is truly owned and controlled by the firm. As the underlying supply chain evolves, all of their insight is able to compound.
2. Your Logic, Automated
Information, calculations, and logic previously living in obscure places can now find a place of key relevance that allows your team to find its benefit without needing any training.
3. Centralized Experience
With all of your information and logic coming under your control, you can now couple that with a singular experience that gives your advisors what they need.
Control over your supply chain of data now allows you to assemble what you need, right when you need it.
Here are some practical ways that wealth management firms can begin to experience this sort of progress with the supplies you have today.
1. Get Control Over Your Data
We get to connect data for our firms all the time. Its an investment but the rewards are that you no longer have to query a gatekeeper.
You can have the answers in front of you and this supply of data can help you unlock insights across the one thing you think about more than anyone else - your business.
Owning your data also pays.
According to a McKinsey study, “Organizations that leverage data are 23 times more likely to acquire customers, six times more likely to retain them, and 19 times more likely to achieve profitability.”
2. Choose Your Partners Based on the Access They Provide You
Just recently I was chatting with a friend of mine who is looking at his reporting software options. He’s between a rock and a hard place in a sense.
In this case he’s sitting between a low cost but closed system and one that can cost nearly twice as much but affords him complete agency over his data.
It's time that we start voting with our data now so we can realize its value later.
Its also time to lobby your tech vendors with questions around how they are participating in the revolution of data streaming, open API’s and making it easier to connect your systems - not just the ones that they offer.
The push for value creation by Private Equity has led a lot of software companies to build walls to try to drive adoption.
But if you wanted walls, you would have stayed at Merrill Lynch or UBS.
3. Get to Know Who You Are
One of the really interesting exercises we see firms go through is to be able to start unpacking their true identity through the data analysis they can now automate.
How do advisors actually perform versus how you perceive they do?
Are advisors actually adopting all the value-added services you’ve invested in over the past several years? These include game-changing solutions like DPL, Holistplan, Pontera, and more.
Or did you spend much time with the 15% of your advisors who are natural early adopters?
Put your data to work and start to transform how you lead your team.
The beauty of this process is that its a process. It does take time but often that time gives you the right insights to start coaching your team to new levels of success day by day — with just enough information to really add value.
Toyota Today
Today, Toyota is the world’s largest car manufacturer and has a $291B market cap. It employs over 370,000 people worldwide and will produce between 9 and 10 million vehicles a year. My family drives around in one every day.
When I needed to find a car for my teenagers, I looked at Toyotas first because they hold their value and tend to be very reliable cars. Toyota knows that success for their firm, means success for us as consumers too. I hope the value you add for your clients is felt for generations to come.