Advisers envision a disrupted advice industry if Amazon shows up

Amazon serves up great prices at an amazing speed. Could it make financial advice easy, too?
JUL 06, 2017

News that Amazon is buying Whole Foods has some financial planners envisioning a transformed advice industry if the internet giant buys its way into the business of delivering personal financial services. The prospect is not much of a stretch given the online retailing behemoth already does lending — to the tune of $1 billion to small businesses over the last year – as well as payments and credit cards. "Amazon has the trust and rapport built with millions of Americans," said Julia Carlson, chief executive of Financial Freedom Wealth Management Group. "They have the ultimate distribution system set up, so if they wanted to launch something, it's pretty easy for them since they have the people and their trust." Forward-thinking advisers say the entrance of a firm like Amazon or Google in the financial advice space would likely appeal mostly to the masses, but it would probably cause advice prices to go down and demands for delivering financial services faster to go up for all. (More: Whole Foods-Amazon deal — which funds have the biggest stakes in the merger?) The biggest threat from Amazon would be if it partners with an established firm like a Fidelity Investments or The Vanguard Group, advisers said. Such a union would help Amazon with the compliance concerns that tend to keep firms out of highly regulated industries like financial services, and it would offer financial street cred. Having the benefit of a respected financial name brand would likely erase hesitations that consumers might have in thinking about Amazon as an expert in handling their life savings. "Amazon is certainly changing a lot of industries," said Rose Price, a partner at VLP Financial Advisors. "Depending on what pieces of financial planning they deliver through technology and how they partner with or buy other firms, they could revolutionize how quickly advice is delivered." Investors, especially young ones, increasingly want answers to their financial questions supplied on demand. What would be easier or quicker than asking Alexa, Amazon's virtual personal assistant, "Is this mutual fund a good investment for me?" "That's instant, no waiting a month to fit into my schedule," Ms. Carlson said. "I would be concerned about that disruption in the industry." In addition to speed of delivery, one of Amazon's advantages in all its businesses is the internet retailer's use of data to predict what the consumer wants and needs. (More: In the future, advisers will be at customers' beck and call) Some experts believe Amazon — or another big internet master like Google — could dip its toes into the advice business by buying or creating a financial aggregator like Mint.com, which consumers use to organize all their financial assets in one place. That would be valuable data for Amazon if it were to take the next step of selling advice. "Aggregation is the window into one's financial life," Ms. Price said. "If you can access someone's aggregated assets, you will already know what people hold and you can send them personalized information and offers and you might get them to act." Some advisers believe the entrance of Amazon could spark a new age of financial consciousness if the firm is able to teach the importance of basic financial management to the masses. "They have an opportunity to change for the better the landscape of financial planning in America," said Matthew Ramer, principal at MOR Wealth Management. "There is a huge sea of people who need basic budgeting help." Of course, if Amazon's guidance steers investors in the wrong direction, the firm could harm a giant swath of people. (More: Are regulators equipped to monitor robo-advisers as fiduciaries?) "Amazon has a great opportunity to provide resources I couldn't give," Mr. Ramer said. "But the firm could also help people destroy their financial lives if they do it wrong."

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