5 steps to incorporating a robo into your firm

Time for advisers to develop an online approach — here's how

Feb 3, 2015 @ 1:40 pm

By Liz Skinner

It's time for financial advisers to start figuring out how to integrate an online advice solution into their businesses because clients will increasingly expect financial services to be delivered this way.

Some early adopters of online adviser operations are using it to target clients with smaller accounts or younger investors. But such a focus may be too limiting, said George Tamer, a managing director for TD Ameritrade Institutional.

All clients want — and increasingly will demand — services to be delivered faster. It's the way they are used to receiving other things, like shoes from Zappos and nearly anything from Amazon, he said.

Advisers can drag their feet, but they'll likely find themselves among a lonely universe of dying firms — sort of like financial advisers a decade ago who didn't believe it was necessary to invest in a website.

David Dowell, a partner with Russell Capital Management, has finally come around to the inevitable: Down the road, his firm, with $500 million in assets under management, will need to offer a digital investment solution.

"Maybe not in one year, but probably within five," he said.

But how do advisers break into this offering? Here are five important steps to get started.

1. Choose which services to digitize

Advisers don't have to build a “robo-adviser” the likes of Wealthfront, where everything is online. Think about which services to offer digitally, consider things like educating clients, providing performance reports and giving market updates. Planners should digitize these types of “low-value” services and save the advanced wealth advising for live advice, Mr. Tamer said.

2. Check if your custodian or other service providers can help

Many custodians and other firms that provide advisers with business technologies are helping advisers integrate digital services into their practices. Charles Schwab & Co. is creating its own offering that will be available to advisers later this year, while Fidelity Investments and TD Ameritrade Institutional have teamed with other providers to help their clients integrate the technology into their systems.

3. Investigate “robo-advisers” that work for advisers

Jemstep Inc., Upside Financial, Trizic and NestEgg Wealth are among the firms that have developed an online advice platform for advisers to incorporate into their businesses, and they're probably cheaper and quicker in the long run than creating a system from scratch. Their offerings differ, but most focus on the client experience. “We are being trained by Amazon, Netflix and others that engineer the experience around making it easy to say yes,” said Simon Roy, president of Jemstep, at the TD Ameritrade Institutional conference in San Diego last Friday. “We are bringing the same approach, making it easy for a client to engage and be self-served online.”

4. Check out what the competition is doing

Financial advisers of many sizes already are implementing digital solutions, including Ritzholtz Wealth Management's four-month-old service called Liftoff. Josh Brown, Ritzholtz chief executive, said at the TD conference last Friday that the online business just crossed $1 million in assets under management. Mr. Brown said 70% of traffic so far is coming from his being quoted or cited in popular media, and 50% of the assets are retirement funds, like individual retirement account transfers.

5. Budget the time and money to work on the solution

Whether you buy or develop the technology, it will require funds, but time is the resource many advisers forget to allocate when thinking about projects this big.

“It's a journey, and you're never done,” said Eric Clarke, president of Orion Advisor Services.

Adviser technology experts say it's time for advisers to start evaluating their own value proposition and figure out how online services can best support their business. As they get past these first decisions, they can think about what to tell existing clients about the new service offerings and how to start driving traffic to the online service.

“It's not a matter of should we be doing this — we have to be doing this,” said Joel Bruckenstein, a technology consultant to financial firms.


Are you thinking about an online solution for clients?

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