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Outside voices and views for advisers

Why I left a traditional RIA for a robo-adviser

May 30, 2014 @ 12:01 am

By Megan Graf

Megan Graf, client service specialist at FutureAdvisor.
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Megan Graf, client service specialist at FutureAdvisor.

Before I moved to FutureAdvisor, I was working for a registered investment adviser with $50 billion in assets under management, expanding their high-net-worth business globally. I received rigorous training, mentorship and great opportunities as the firm expanded. I had every expectation of a long and successful career there. So why leave?

Put yourself in my shoes: I have, at a minimum, 40 years left in the job market. And like it or not, algorithmic investing is doing more than creating competition in the industry — it is changing investors' expectations about fees, transparency, online access and even the service relationship itself.

More: Even older investors are turning to the web to manage assets

I knew that even if I achieved the success I sought at a traditional adviser, I would eventually face the added challenge of adapting a large, established firm to a new wave of high-net-worth investors: those who will emerge from today's mass affluent. I didn't see the necessary agility in the traditional model to scale for the next generation of clients anytime soon. Nor did I find a willingness to fundamentally shift traditional service structures and technology. So when I saw an opening at FutureAdvisor, I leapt at it.

Eric Schmidt, chief executive of Google, told Sheryl Sandberg early in her career about the downside of pursuing short-term prestige, and the upside of positioning yourself for the long term. He told her: “If you're offered a seat on a rocket ship, don't ask which seat. Just get on.” FutureAdvisor is my rocket ship. I decided the rewards of staying put — a nice title and slightly higher pay in the short term — were far less valuable than gaining experience in this new space, and staying ahead of the curve.

Robo-advisers can serve smaller investors, who are often younger, so by default we're shaping demand for future advisory services. When our clients become the high-net-worth clients of tomorrow, they'll already be accustomed to this kind of service.

“Robo-advising” is not perfect — no advice is — but through technology, we can implement strategies equal to, if not better than, what some traditional advisers might offer. We also charge lower fees, give 401(k) advice and offer a user interface that often makes live financial advisers unnecessary.

That's scary to hear for industry veterans who have cultivated strong and trusting relationships, and made a profound difference in the lives of their clients.

But I have to be bold where others are fearful. There's a vast population of younger, smaller investors historically excluded from personal investment advice simply because it's never been economical for human advisers to serve them one at a time. Those people can be better served by a few systematic minds using technology and automation, who capture the essentials of portfolio management in algorithms easily scaled to the widest possible market.

Twenty years from now, it's possible that things may have changed less — or shift more drastically — than I imagine. But my experiences at FutureAdvisor have already taught me to think more critically — and creatively — about the way money management can look. I'll be a more valuable team member as a result.

Megan Graf is a client service specialist with online advice platform FutureAdvisor. If you have questions about life and work at a robo-adviser, feel free to e-mail her. The views expressed represent the opinion of the author and are not intended to reflect those of FutureAdvisor or serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities.

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