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Ready for the Robos


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Written by Mark NagleTreysta Wealth Management
Sydney, Australia

Advisers need to make sure they are on the right battlefield before preparing for the fight.

I’m reminded of the 2003 movie Terminator 3 Rise of the Machines whenever I hear adviser chatter about the imminent arrival of the robo-adviser. The movie tells the story of the battle between man and machine and that’s the battle that many in the advice industry see looming in the not too distant future.

The ‘robos’ are coming and it will get bloody, of that there is no doubt.

But I would argue that the better advisers shouldn’t even be on the field of battle, let alone being killed off.

Last month I appeared on a panel at the ifa Business Strategy Days held over three sessions in Sydney, Brisbane and Melbourne.

While the experience in each state was a little different the key theme was consistent, advisers are struggling with what I will call the value conundrum.

Many advisers assume that their investment prowess is what their clients most value, their ability to pick stocks/managed funds or rebalance their portfolios and they feel that if they let this go their value disappears or is greatly diminished.

However countless surveys and studies (not to mention adviser experience) suggests that the investment piece is not what our clients value, instead they rate relationships and communication as being the most important elements.

To best illustrate this here’s an anecdotal story of a conversation I had after one of my panel appearances.

An adviser came up to me and wanted to understand what I meant when I said that in my business we “outsource” our investment service.

Having explained this to him he looked at me with genuine puzzlement and said “well, what do you for your clients’ then?”

I asked the fellow to think back over his 30-year career and consider all of the great successes he’s enjoyed with his clients, the days where he felt really good about the work that he does, the moments where he genuinely changed peoples’ lives.

You could almost see the epiphany unfolding as he said to me “it’s never been about the investments has it?”

The reality is that your clients are crying out for you to redefine your value proposition to match what’s important to them.

So here’s the irony – clients value the relationships we create with them, they value our guidance and counsel and deep down most advisers accept this.

These are the very components and elements of what we do that robo-advisers cannot yet compete with.

Why then continue to flaunt your investment prowess as your value proposition, why let the investment piece take up so much of your time with clients?

This behaviour will put you in direct competition on the battlefield with the robos and they will likely beat you; they will be better resourced, cheaper, deliver consistent client experiences and be great at communicating to their investors.

Be clear in your mind where you add genuine value, work through the fear of redefining your value as you see it, and you’ll be amazed at the client response.

You will not even need to step onto the field of battle with the robos because you will have removed yourself from competing around portfolio management.

Churchill once described Russia as a riddle wrapped in a mystery inside an enigma – don’t leave your clients feeling the same about your value proposition.



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