The robo-fication of RIA deal making

The robo-fication of RIA deal making
Deal making will undergo a change fueled by new technology but the most powerful approach will integrate technology and human consulting.
MAR 10, 2015
The wealth management industry is awash in robo hype. The mainstream introduction of online, automated investment services, known as robo-advisers, has the financial advisory business riveted. Headlines, shop-talk and strategic planning sessions are dominated by the human-versus-technology debate for current and future clients. We may never anoint a clear winner. Think back to when the automated teller machine was introduced. Many of the common banking transactions performed by bank tellers were completely replaced by a computer. Despite that technological innovation, human bank tellers still exist today because the human element matters. Real professionals address dynamic, complex and emotional situations in a way that computers cannot – at least not yet. Robo-advisers fulfill a market need for an efficient, online, total investment experience, and at a competitive price. They have prompted many financial advisers to question, or at least seek to verify, their own value within their investment advisory relationships. Their early success and greater future potential has the financial advisory community rethinking business models and contemplating how much of what is currently provided by human advisers will be replaced by technology. IMPACT OF HUMAN TOUCH Interestingly, what is being revealed in the short run is that rather than rendering our human advisers obsolete, the robos are reinforcing the impact of human touch and personal contribution. As Elbert Hubbard so eloquently summarized, “One machine can do the work of 50y ordinary men. No machine can do the work of one extraordinary man.” The most powerful approach integrates technology and human consulting, and that like the robo-movement, the deal makers' arena will also undergo a change fueled by new technologies. Historically, this marketplace has offered high-end consulting via a human relationship. While technology has supported some, or many, of the core functions of an M&A investment banker or strategic adviser, it has typically been invisible to the client eye. The more recent past has introduced a growing number of technology-based offerings to solve for RIA M&A and matching. These programs run the gamut from listing services to online forms to algorithmic matching sites. As a generalization, they are primarily online experiences that may include a human advice component. Arguably, both types of services are valuable as they seek to meet the needs of a varied population. There are undeniable factors in today's environment that warrant an added approach, unifying the best attributes of what already exists. Much like wealth management, RIA M&A and matching could benefit from the same type of disruption robos have imposed. The sheer number of advisers, the fractured landscape and disproportion of small RIA firms to large RIA firms yearn for a customized, efficient and intelligent experience at a competitive price point. Moreover, the regulatory requirement for succession, healthy fundamentals for wealth management, aging demographics of RIAs and strong conditions for consolidation require a model that can attract and facilitate both volume and quality of deals. EMPOWERING ADVISERS Finally, the nuanced nature of the art and science of any potential transaction deserves dynamic analysis, human advice and sophisticated algorithmic matching to formulate business options, set context and expectations, and deliver personalized recommendations. Ultimately, a technologically integrated human consulting experience should foster a greater number of empowered advisers as well as healthy, rewarding and enduring outcomes. As deal making consultants to RIAs, and matchmakers between them, we embrace what technology can do to augment our process, to enhance our services and to help us more effectively provide counsel. As the effects of the robo-lution ripple across the industry, we are optimistic that the market is ready for a changed value equation. In any profession, by combining the expertise of top industry consultants with the power of technology, everybody wins. Deal us in. Kathleen Asack is principal at AmplifyRIA and Mary Ann Buchanan is CEO and co-founder of RIA Match.

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