Cambridge to have robo offering for advisers in 2016

The independent broker-dealer's aim is to incorporate an online advice platform as a tool for reps

Jan 28, 2015 @ 12:01 pm

By Bruce Kelly

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Independent broker-dealer Cambridge Investment Research Inc. plans to have a competitive robo-type offering that works in sync with its 3,000 advisers' practices in 2016.

“It's an opportunity for us to give advisers tools that are similar to other offerings but [which] don't take them out of the middle of the relationship with the client,” said Amy Webber, president of Cambridge. “I don't think it's a threat. We have to figure out how to integrate it and we have to embrace what an investor wants from it. It's a low cost tool for the next gen client who typically doesn't have a lot of money” that ultimately will contain a pay-for-advice component, she said.

(More: Independent broker-dealers take aim at the next generation of clients)

Some type of robo-offering will be a 2016 technology initiative at Cambridge. “I think we will have pieces of it," Ms. Webber said. "It could be a digital partner to the planning and advice process and [include] tools we already give our advisers. Just like websites didn't exist 20 years ago, it's another tool we will plug into this independent model that keeps evolving.”

So-called robo-advisers, or automated wealth management platforms, appear to be gaining traction among traditional brokerage and registered investment advisers. In the fall, Commonwealth Financial Network CEO Wayne Bloom said the firm was looking at how it could develop a robo-adviser type offering that meshes with the high-end practices of its 1,700 registered reps and advisers.

Also in the fall, high-profile advisory firm Ritholtz Wealth Management launched its own robo-adviser platform with the help of technology startup Upside Financial. In October, Charles Schwab Corp. said it was introducing an online advice platform for retail investors in the first quarter of this year and an online platform that advisers can use with their clients in the second quarter.

(More: Robo-advisers say they aren't worried about Schwab)

“In our space, I see them as more of a digital partner to what the adviser does,” said Ms. Webber, who made her comments in San Antonio, Texas, on Tuesday at the annual meeting of the Financial Services Institute. “Our human advisers will keep doing the great work that they do, but Cambridge has to give them some tools where they can talk to their clients who will say to them, 'Hey, my neighbor is using a robo-adviser.'"

Children of older clients are using robo-advisers, and then they bring what the robo-adviser produces to meetings and ask advisers what to make of it, she said. “That's where the value of the adviser comes in,” she said. Robo-advisers will be attractive to the so-called do-it-yourself investor, who first gained attention in the stock market boom of the 1990s, she said.

An internal group of advisers is looking at the issue, she said. Current robo-offerings vary. “They have financial planning tools, such as a plan and a proposal,” she said. “But, do we really want the end client trading? Is there a stop at that point that pings the adviser and asks, 'What do you think?'”

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