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Tips from #MICUS: How RIAs are Successfully Integrating Robo Services


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If you are a regular on the financial industry conference circuit, you can’t escape the robo-advisor panel discussions, keynotes and exhibit hall scuttlebutt.  Everyone wants to be in the know and discern whether or not the rise of the robo is a threat to their business prospects or an opportunity to seize.

After attending Morningstar’s annual conference in Chicago, it’s clear that the conference organizers got the memo: robo talk will draw a crowd. Recently, a report by A.T. Kearney showed that while only 3 percent of respondents use a robo service, almost 70 percent reported having a strong interest in the alternative planning space – a significant statistic highlighting growth potential in this arena.

While some advisors may look at the robo space as a competitive threat, there is a strong argument that the related opportunities should be embraced and considered as advisors look to adapt their business models. Below, we outline a few tips for RIAs that are interested in incorporating some varying level of robo service into their practice.

1. Recognize the different levels of service. The beauty of integrating a robo service into a business model is that the digital arm can serve (and manage) a scalable group of prospects and clients. The millennial and Gen X generation are a rising target niche that advisors are trying to attract, given the aging baby boomers and the potential for wealth transfer over the next few decades. With these prospects in mind, offering a digital service at a lower cost can help to attract and retain these groups who will only age and attain more wealth over their lifetime. Robo services can be just one arm of your overall business, but if employed correctly, can be a valuable tool to help attract more clients at a lower price point that may go on to then require a higher level of traditional services.

2. You don’t have to be a software engineer, just vet one properly. The idea of launching a robo arm of your business can seem daunting, however, there are a handful of businesses (Oranj, Jemstep, etc.) that develop the actual software that you and your client will inevitably use. When vetting such firms, evaluate your current business, goals that you want to accomplish by incorporating a digital platform, and the experience/feel that you ideally want to offer. Align yourself with a program provider that can adapt to these objectives.

3. With increased mobility comes increased need for cybersecurity. As tech usage in the advisor industry continues to proliferate, so does the risk of cybersecurity threats. A poll commissioned by E*TRADE shows that 49 percent of investors with at least $10,000 in an online brokerage account use their smartphones to access an investing app weekly. Of that 49 percent, over half access their account at least daily. The same can be said for advisors. According to Financial Planning’s Tech Survey 2014, 66 percent of advisors use a tablet to conduct business.Taking the appropriate preventative cybersecurity measures to protect clients’ assets and personal information falls under the fiduciary responsibilities of an advisor. But advisors need to take it a step further than purchasing anti-theft software. During a breakout session at this year’s Morningstar Investment Conference, Blane Warrene of QuonWarrene noted that cybersecurity isn’t just about tech but also about behavioral concerns, such as:

  • Using one password for multiple accounts
  • Using free Wi-Fi over unsecured networks
  • Sharing devices on a network
  • Being “too social” on social media

Advisors would be wise to develop educational materials for clients that help them understand the risks of accessing their accounts on mobile devices.

4. Let the world know. You’ve embraced and adapted cutting edge technology, upgraded security measures, and are ready to roll out the product. As an early adopter, you have the advantage of establishing yourself as an industry thought leader. Take the next step and use tools that reach your tech savvy audience the way they want to be met. Developing a company blog serves as a great platform for sharing investing insights and reactions to the latest market news. Setting up and maintaining active social media accounts is another great way to get in front of potential clients and share blog content or media coverage. This is how the new generation of investors is communicating. If you want to get their attention, take advantage of the technology that they are already using.

Advisors shouldn’t look at the robo trend as a threat, but as an opportunity to get an early foot in the door with young investors. Employing new technology should be a component of the strategic plan for future growth and sustainability. It’s a proactive approach to preparing for the inevitable attrition of aging clientele as they start to draw down assets in retirement and pass on their wealth to future generations.

Note: This post is a collaboration between Karyn and another member of the Gregory FCA team, Freddy Martino.

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