Technology Column

What advisers actually want from robos

These are some of the key features advisers consistently rank as imperative

May 11, 2017 @ 4:10 pm

By Rick Frisbie

Are we in an automated wealth management bubble? In the last several years, more robos have popped-up than food trucks in a hipster neighborhood, but all of the platforms are often different from one another in their distinguishing characteristics, platform features and fundamental differences. How many more can enter the market, and how long until we see some firms shutter, merge or (business cliché alert) pivot?

Ultimately, the winning robos will provide two things on the investment and technology fronts, respectively:

1. Tax and volatility cognizant rebalancing engines (the 'robo') coupled with institutional quality investment models and customizable goal-and-risk based investment frameworks.

2. An integrated suite of features to run their business, which can be deployed painlessly. Advisers willing to endure the switching pain from legacy stitched-together 'Franken-stacks' of multiple technology vendors to a singular suite of features will experience true 1 + 1 = 3 tech optimization.

Having had many conversations with advisers, these are some of the key robo features which they have consistently relayed as imperative.

(More: MLB managers can coach advisers through the robo-revolution)


Channel loyalty is key for advisers. If a robo has a core business-to-consumer existence, and its brand, name, URL watermarks, etc., continuously appear before the advisers' clients, that's obviously not ideal from an adviser's perspective. The legacy consumer direct business is disintermediating by its very existence. I've heard advisers lament that their clients will receive emails directly from the robo.


The term is bandied about in the same way your buddy claims, "Oh, yeah, I could definitely dunk in high school."

Open architecture means no constraints on the universe of ETFs and mutual funds that the bank custodies. The adviser has full liberty to choose the portfolios' inputs. It also includes the adviser being able to offer their own asset allocation models, the robo's and/or those of institutional-quality investment managers, as well as the ability to build their own asset class hierarchies. Last but not least, open architecture allows the adviser to create bespoke goal-and-risk glide-paths plus frameworks.

(More: How to make the most of human and robo-advice)


Imagine if all the lights in your house were connected to one switch. Swipe up, and every single light is on. Swipe down, and every single light is off. That's not functional if you're spending time in your kitchen but not the "TV sports entertainment cave."

A robo that operates in that same vein — being on-or-off for all clients simultaneously — is similarly not compatible to an adviser's business. All clients are not alike, and the robo should reflect that. You just can't efficiently put a portfolio of laddered municipal bonds through the Flux Capacitor. Sometimes a robo-service is just not applicable.


There are robos that don't rebalance and trade and only make recommendations. However, the point of a robo is to streamline the adviser's time, and trading across all accounts takes up a lot of time.

Others offer a trading algorithm, based on risk, but have not experienced the volatility of the capital markets. A truly effective robo should be helmed by different teams that have both the proven investment acumen and technological prowess to build tax and volatility cognizant algorithms, which efficiently inform the trading execution.


Advisers' time is much better spent servicing their clientele and building the practice, rather than wrangling with billing, old-school paper-centric onboarding and figuring out how the CRM plus performance reporting all jibe. Robos should be operations and technology optimizers. They should offer suites of integrated features. The adviser is ready to shed that Franken-stack of technology vendors. Robos just have to win their trust.

(More: Robo-adviser Wealthfront now offering loans, not just advice)

Google was once back in the pack as a search engine. Similarly, I suspect we will see a lot of movement up, down and out of the robo market share tables, in due time, as certain robos home in on what advisers truly want and need.

Rick Frisbie is CEO of RobustWealth.


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