The nation's best performing independent advisory firms don't plan to add automated financial advice platforms to their list of services, even as lots of other firms are planning to go robo.
Only 9% of “elite” registered investment advisers — those highly productive firms with more than $250 million in assets under management — said they plan to integrate a robo-adviser within the next two years, according to the
InvestmentNews/
BlackRock 2016 Elite RIA study released Aug. 2.
Meanwhile, a quarter of all other firms said they planned to incorporate such a platform within the next 24 months, the survey of 401 advisory firms found.
Attracting new client segments, such as younger investors and those with lower account balances, was the top reason those who will be starting an automated advice option chose for doing so.
“Smaller firms are four times more likely to be adding a robo-adviser than these elite RIAs,” said Matthew Sirinides,
InvestmentNews senior research analyst. “The elite firms aren't looking to go that far downstream.”
Some larger RIAs also don't think automated advice is the best way to serve clients.
Karen Altfest, principal adviser with Altfest Personal Wealth Management, which won a Best Practices award from
InvestmentNews in 2014 for being a top performer among advisory firms, said her company will not incorporate an automated platform.
“That's not what our clients come to us for,” she said. “It's not customized and it's not handholding.”
That decision comes even as the firm is focusing on boosting its number of younger clients.
Young professionals seek help from Altfest Personal Wealth Management to pay down their student loans and set themselves up to buy homes and take care of children they haven't even had yet, Ms. Altfest said.
“How do they get that from a machine?” she asked. “They deserve our best advice with a financial plan that's customized and with our best thinking in it.”
(More: 5 ways elite RIA firms set themselves apart from the competition)
In all, about a third of non-elite advice firms will have an automated advice platform in the next two years — about double the percentage of high-performing advice firms that expect to have one, according to the report.
Elite firms are actually laser focused on attracting even more of the ultra-high-net-worth individuals and families that have helped them to generate superior financial performance, the report said.
About 69% of elite firms serve clients with more than $10 million in assets under management, as opposed to 29% of all other firms tapping this very affluent segment, according to the survey.
Looking forward, elite RIAs want to continue moving upstream with their client base, including adding more institutional clients.
More than a quarter said they'll make an acquisition in the next 12 to 18 months, the survey found.
