Are You Set to Embrace Automation for Your Clients’ Sake?


A Financial Times Service

April 28, 2016

By David Benskin

Nowadays, robo advisors are a mainstay on the wealth management technology landscape. New strategic questions arise for human advisors, broker-dealer technology executives and, really, anyone running a financial-service business these days.

And that fundamental question is: how can legacy firms embrace the best of robo automation to enhance the client experience and drive operational efficiencies in order to increase revenues? Particularly in a post-DOL, post-robo world, pricing pressures will become yet another reality that will hinder growth going forward, creating urgency for executives to act now.

While initially, the industry’s reaction to the entrance of the robos was one of denial and hope that the early robos would just fizzle out and go away, these online advice purveyors proved more resilient than most critics thought and now have a foothold in wealth management.

Not so much from the tiny, annoying, VC-backed upstarts, but rather driven from the mainstream acceptance by the giant online brands Schwab, Fidelity, and Vanguard along with the massive asset managers Black Rock and Invesco making large strategic bets on automated advice through their acquisitions.

The reasons why are clear to see.

While the idea of an algorithm managing and rebalancing portfolios is absolutely not a new idea, the automated robo advisors’ front-end interfaces with their simplicity, self-service abilities and aggregated views on any mobile device are transforming the client experience in wealth management.

In today’s world where consumers buy products and services with a few swipes on their smart phones in order to get it now, who in the future will want to drive to their advisors’ office, fill out 35 pages of paper account forms and agreements, just to get started with investing or switching advisors? Or have to peruse and manually reconcile statements and account information held at multiple institutions just to make sense of their entire balance sheet, net worth and financial planning analyses?

The message is clear: in order to succeed in the post-robo wealth management world, advisors, broker-dealers and their executives are now playing catch up in automated client experience technology and need to level the playing field or risk being left behind – a true Kodak moment if there ever was one.

According to a study by global consulting firm, Cap Gemini, 64% of affluent individuals, including high net worth investors, expect their future wealth management relationship to be digital.

Additionally, 65% of affluent individuals, including high net worth investors, will leave their wealth management firm if an integrated technology experience is not provided.

Industry experts all agree that to succeed in the post-robo wealth management world, advisors and broker-dealers need to solve for the new automated client experience technology gap.

Which brings up the key strategic question, do you build it, buy it or rent it? Clearly the mega-asset management firms and online brands have the trillion-dollar asset bases to be able to build it themselves, or outright acquire these capabilities.

However for the typical advisory firm or broker-dealer, dropping hundreds of thousands or even millions of dollars on an technology project that can become obsolete the minute it is released has many sitting back, debating what to do.

Unfortunately for the industry, many of the independent platforms that used to provide these types of automated client experience tools have been acquired by competitors, such as Fidelity’s acquisition of eMoney and Envestnet’s acquisition of data aggregator Yodlee.

Strategically, do you as a financial services’ executive want to place the future of your firm’s technology with a competitor? Do you really want to be at the whims of those institutions that may change strategies down the road?

We’ve seen the disruption that this can cause. Continue reading

More Insights

What Does the Wealth Access Investor Portal Look Like?

What Does the Wealth Access Investor Portal Look Like?

High net worth investors bring an expectation that their advisors will provide them with deep insights, more frequent communication and instant access to their financial information. They may be risk-averse or aggressive investors, and want to know that their advisor...

How to Determine Where to Invest: AX or CX

How to Determine Where to Invest: AX or CX

Pop quiz! Which matters more for the success of your bank: Advisor Experience (AX) or Client Experience (CX)? In other words, which one would move the needle more for your bank if you invested in making it better? Answer: It depends. Yes, that’s a bummer of an answer,...


    Follow this link to access Privacy Policy