Robo-Advisors Need Advisors, Too.

The rise of the robo-advisor is often portrayed as the end of the traditional financial advisor. However, our recent webinar, in collaboration with Aite Group, titled “Unifying the Advisor and Investor Experience: The Rise of Client-Centric Wealth Management,” tells a much more complex story about the future of the wealth management industry.

The webinar, which was jointly led by Chris Psaltos, VP of Product Development at Scivantage and Sophie Schmitt, Senior Wealth Management Analyst at Aite Group, focused on the ways robo-advisors are impacting the overall business model in wealth management, as firms look to digital tools to drive revenue and reduce operational costs.

In the past year alone, robo-advisors increased in assets-under-management from $2 billion to $5 billion. However, despite their relatively rapid growth rate, robo-advisors are still not positioned to radically alter the wealth management landscape. According to the Aite Group report titled, “The Race to Easy: Reevaluating the Wealth Management Technology Strategy,” millennial investors’ utilization rates for personal financial management technology is low without the presence of a human advisor.

To combat this challenge, large asset managers like Charles Schwab and Vanguard have integrated robo-advisors into their overall business structure and strategy. This tactic demonstrates the way of the future, as technological tools will create a single data platform that will allow clients to visualize their own investments while retaining the expert counsel of advisors.

According to our webinar experts, the top areas for investment consideration are:

  1. Data Integration Software Collect and analyze your clients’ data and create a central location that all advisors at your firm can access. Big Data allows firms to compare client actions, which will drive information-enabled investment decisions and improve the internal consistency and external credibility of your firm’s advice.
  1. Digital Communications Infrastructure Create better digital content that speaks to the young investor. The language needs to be engaging and accessible through infrastructure like client portals, co-browsing technology, seamless phone and video conferencing technology.
  1. Digital Marketing Build websites that allow advisors to continually post fresh content and craft customized email marketing campaigns.
  1. Dynamic Financial Planning Services Implement financial planning technologies that allow clients to experiment with different options. This will ultimately present an opportunity for advisors to learn more about their client’s habits and interests. Investors tend to value advisors who provide proactive advice/service instead of waiting for an annual review.
  1. Web-Based Portfolio Management and Client Reporting Invest in digital client facing tools that give advisors and investors access to the same information. Furthermore, consider expanding investor portfolios to include assets outside of what your firm normally trades.

Overall, the robo-advisor will not be replacing the traditional financial advisor in the immediate future. Nonetheless, it is essential for the traditional financial advisor of today to respond to consumer demand by adopting next-generation tools that integrate advanced analytics and data-driven insights, complex trading strategies, and truly unify the wealth management experience. This will ultimately benefit the investor’s bottom line and secure a place for the traditional financial advisor for the foreseeable future.

To learn more download our joint webcast with Aite Group, “Unifying the Advisor and Investor Experience.”


Posted in Scivantage, Wealth Management, Webinar and tagged , , , .