Practice Management

Prepare your practice for the post-robo world

As robo-based services become more acceptable to clients of all ages, advisers will have to work differently

May 11, 2015 @ 10:43 am

By Joni Youngwirth

Every day, we read about how our industry is shrinking, as older advisers retire and fewer younger advisers take their place. Simultaneously, offerings in the robo-space continue to evolve, while existing advisory practices — particularly solo practitioners and smaller ensembles — face mounting obstacles to maintaining a scalable and profitable practice. How will these developments affect younger boomer advisers, as well as those from Gen X and Y, in the future? Let's take a closer look.


Though the concept of robo-advice is relatively new, it has already gone through many permutations. What is emerging is a human-machine interface that will be increasingly embraced, if for no other reason than necessity.

With fewer advisers doing more work for a greater number of clients, advisers will have to leverage technology to help manage the more commoditized aspects of fulfilling clients' needs. As time goes on, investment management may become one of those services, especially given the adoption rate of exchange-traded funds and other passively managed funds.

Likewise, robo-based services will become more acceptable to clients of all ages (not just millennials) and will likely become sufficiently advanced to meet a wider range of needs. Until artificial intelligence becomes mainstream, though, I don't expect robo-advisers to supplant advisers in providing comprehensive wealth management or relationship-based services to clients.


To be sure, some clients will receive all the financial advice they need from a robo-adviser. As a result, advisers will need to ensure that they have precisely defined client segments so they know which services and which clients can be delegated to a robo. Even certain A- and B-level clients may receive at least some components of their service via a technology-based platform. But where robos today are separate offerings, I see the robo of the future as a technology platform integrated with and overseen by the adviser's business.

This will essentially eliminate the controversial concept of pruning clients, as the adviser will “insource” services for certain clients to his or her own technology platform, thereby freeing up time to spend with the clients who want or need more intensive work.


Of all the changes that advisers will need to make in the future, increased delegation may be the most essential. First, advisers will need to delegate the delivery of financial advice by tapping customer service personnel and paraplanners to a greater extent than they do today. This will require a firm to employ more financial planners with varying levels of sophistication and skill to align appropriately with different client segments.

Advisers will also need to at least delegate administrative tasks if they have historically assumed any. Furthermore, more advisers will look to share the responsibilities related to being a business owner. They will not have the time to be CEO, CFO, the HR department, the technology department, the marketing department and the plant manager — a common scenario we see with many small businesses today. And this is what will fuel the last shift.


More advisers in the future will choose to merge their practices with others so they can focus on meeting the needs of a larger number of clients, while delegating or sharing resources for managing the business. With this shift, we will see larger and more complex firms emerge. Individual managers of HR, technology and marketing will support advisers, but everyone will be overseen by a CEO. Managing partners will become more the norm and less the exception.

Throughout this evolution, advisers will need to stay focused. Although the number of clients served may increase, there obviously can be no commensurate change in the amount of time available to work with them.

To not merely survive but to thrive in this industry of the future, advisers should be prepared to be good team players and managers and not necessarily the top dog who calls all the shots. And they need to be ready to embrace technology as the platform that can help get them there.

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.


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