Robo-adviser debate takes center stage at FPA gathering

Robo-adviser debate takes center stage at FPA gathering
Whether robo platforms can effectively draw younger investors to an advisory business a point of contention
SEP 29, 2015
An entertaining debate on the value of adding robo-advisers to traditional advice firms drew a large crowd of planners Sunday, even though it may not have helped many decide whether to implement one for their clients. Speaking at the Financial Planning Association Business and Education conference in Boston, Lex Sokolin, chief operating officer of Vanare, said digital advice platforms can be applied to effectively draw younger investors to an advisory business. Vanare markets the NestEgg automated advice solution, "Advisers are challenged in how to connect with the children of the parents that they serve," said Mr. Sokolin said. "Millennials aren't showing up to adviser sites because they don't have a reason to go there." (More: Robo savvy may be the key to newly hired advisers' success) Michael Kitces, director of planning research at Pinnacle Advisory, disagreed, as he has done publicly at other times, and scoffed at the idea that Millennials will "show up in droves" at an adviser's site by implementing automated on-boarding. He also questioned the logic of building a new service offering and model "for do-it-yourselfer Millennials." "How has marketing to do-it-yourselfers helped you so far?" he asked an audience of advisers that spilled out into the hall Boston Convention Center. Mr. Kitces agreed that advisers should be using technology to serve clients better and to run better businesses, and acknowledged that it's an area that advisers have been too slow to adopt improvements. (More: Now is the time to evolve your firm's technology) He recommended advisers create services that are actually valuable to Millennials if they want to attract this group, those born from the early 1980s to early 2000s. For instance, cashflow assistance and career advice are among the financial planning needs of younger investors, he said. Mr. Sokolin stuck to his assertions, though, telling advisers that by adopting a robo-adviser, they would be able to profitably handle smaller accounts and serve a new client segment. He also argued that it would help advisers serve the children of clients and position them to retain the wealth when it's passed down from older generations.

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