Commonwealth building technology with an eye on the robo-adviser

CEO Wayne Bloom says the firm is considering how a robo offering could help its advisers better connect with clients

Oct 8, 2014 @ 4:59 pm

By Bruce Kelly

As part of its continuing emphasis on technology, Commonwealth Financial Network is looking at its wealth of tech and considering how it could eventually fit into a robo-adviser type offering that meshes with the high-end practices of its 1,700 registered reps and advisers.

Any new technology at Commonwealth would not vie for the clients of Commonwealth's advisers, stressed Commonwealth Financial's CEO Wayne Bloom. When asked if Commonwealth would ever build a robo-adviser, Mr. Bloom responded: “It has to fit in the confines of working with our existing advisers. We're not going to do anything that competes with our advisers.”

Mr. Bloom made his comments Wednesday in Orlando, Fla., where Commonwealth Financial is holding its annual conference for its advisers.

So-called robo-advisers, or automated wealth management platforms, appear to be gaining some traction among traditional brokerage and registered investment advisers. Last week, high-profile advisory firm Ritholtz Wealth Management launched its own robo-adviser platform with the help of technology startup Upside Financial. In July, Charles Schwab Corp. said it was kicking the tires on an online advice offering, and CEO Walt Bettinger teased it as a platform that would be “groundbreaking” for the firm.

A robo-adviser at Commonwealth Financial “has to be consistent with something that our advisers would appreciate,” Mr. Bloom said. The advisers “may not use it and most certainly we would never do anything to offend them. We continue to think about it, and as we deploy technology, every piece of technology we're putting into place now is being done, at least on the back burner, with some type of robo offering in mind.”

“We will be able to easily add that to our suite,” Mr. Bloom said. “Every adviser might not use it, but we don't want to do anything where an adviser would be offended by it. Our relationship with our advisers is more important than grabbing some incremental revenue.”

At least one Commonwealth executive was skeptical about a robo-adviser's ability to drive revenue growth at a brokerage firm.

“I don't think the type of business you attract through a robo offering is the highest (return on investment) you can have,” said John Rooney, managing principal.

“Yes, I think we need to have tools to make the end client experience better. Better reporting and integration, for example, and truly be the hub of their financial life,” Mr. Rooney said. “But from a revenue standpoint, I'm still banking on my advisers going after the client with $500,000 to $1.5 million” and the firm giving them the appropriate technology to do so, he said.


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