Voya Financial launching robo-advice platform for brokers

The firm will not offer a direct-to-consumer version of Voya Digital Adviser

Jul 11, 2019 @ 7:00 am

By Ryan W. Neal

Voya Financial is the latest independent broker-dealer to embrace digital advice.

The company plans to launch a hybrid robo-advice product called Voya Digital Adviser that combines human advisers with automated investing for accounts as small as $5,000.

Unlike many firms that provide a hybrid robo, Voya is not offering a direct-to-consumer version of the product. Voya Digital Adviser is strictly for Voya advisers looking to complement their current service offering.

(More: The robo-advice market is growing, but changing)

The goal is to build a more interactive digital experience for clients, make Voya advisers more efficient and modernize the way both advisers and investors interact with the broker-dealer, said Andre Robinson, head of advisory solutions at Voya Financial Advisors.

Voya's research shows that more than half of advisers think a hybrid digital advice tool could help them grow business by 10%, Mr. Robinson said. Advisers also said a robo would make it easier to access client information, connect with younger investors and serve smaller accounts.

"If you look at the traditional advice model, it's meeting face-to-face, it's brochures, it's paperwork," Mr. Robinson said. "We wanted to prune those components away from our financial advisers, and the robo solved for that."

Voya Digital Adviser will integrate into an adviser's existing website, where prospective clients can answer questions about investment goals and risk tolerance, and receive an automatically generated portfolio. It will be up to each financial adviser to decide exactly how they want to deploy the technology or charge for accounts managed by the robo.

The tool will not affect the adviser's compensation, nor will advisers have to compete with a direct-to-consumer version, which Mr. Robinson believes will provide a competitive advantage over digital platforms at wirehouses, especially when it comes to recruitment.

(More: Merrill Lynch adding human advisers to Guided Investing robo)

Though the hybrid robo model is several years old now, Mr. Robinson doesn't feel as though Voya is playing catch-up.

"There are benefits to what I call 'being a fast follower,'" he said, adding that Voya has been able to assess the marketplace and determine exactly its advisers want.

Mr. Robinson sees an opportunity for Voya to differentiate itself from other IBDs by bringing the technology to its retirement, legacy and annuity businesses as well. And while other IBDs have partnered with white-label technology companies, Voya Digital Adviser was built primarily in-house (Envestnet played a small role, but Mr. Robinson declined to specify exactly what the company provided).

"When we look at the other broker-dealers, not a lot of noise has been made on the robo," Mr. Robinson said. "The success really hasn't been there. If we were to unpack it firm by firm, we probably won't find any commonality."

As with most digital advice products on the market, Voya Digital Adviser is limited in the scope of investment models it can provide. The firm envisions this expanding over time.

"This is just a start for Voya," Mr. Robinson said. "We view this as a key growth strategy for us in the foreseeable future … building that digital presence while preserving that legacy model."

However, Voya has struggled with cybersecurity recently. Last September, the firm paid $1 million to settle Securities and Exchange Commission charges related to a data breach, and in February it accidentally exposed the Social Security numbers of several reps.

Part of the firm's remediation process affected the development of Voya Digital Adviser, and Voya has taken a great deal of care around the product's cybersecurity, Mr. Robinson said.

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