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Episode 4: Does adding a robo mean reshaping your practice?

December 01, 2015 @ 3:10 pm

Runtime: 11:32

You have built a practice the old-fashioned way: one client at a time. Would you be willing to scale your business if it meant changing your approach? Find out how Matt Archer and Nina O'Neal react when they are asked to make some alterations.

The Renovation Room

Industry experts and executives offer strategies, tips and ideas on how practices can improve their business.

Kelly LaPalio

Kelly LaPalio

Vice President of National Accounts, FocusPoint Solutions

The conversation between Aaron and Archer in this episode was definitely hands-on. It was compelling to hear about the real life client scenarios discussed between the group. By using a robo solution, Archer may find it easier operationally to help their smaller clients to grow their assets over time. Their goals here are mainly to build in capacity and scale, while maintaining a high level of service across all clients--regardless of account size. Archer's success until this point can largely be attributed to their personalized attention to each and every client, many of whom have referred others to Archer because of their strong relationships with Matt and Nina. Even though their practice size has grown to a point where they could choose to be selective about account minimums, it's clear that Archer wishes to continue working with and bringing on new clients who they feel are a good fit for the practice based on other criteria which are more important to them in the long run.

Over the past several years, most of the advisors our firm has consulted with have needed a small account solution. In fact, most advisors whose financial planning services encompass each client's accounts of all sizes (could) use a systematic process to incorporate even the smallest account. Even if a firm establishes a minimum asset requirement, real life dictates that most clients with, say, a 500k account, also have a smaller account or two somewhere throughout the household's total assets. Many years ago our founder, an advisor himself, developed a system to successfully manage accounts of a (lower--ranging anywhere from 0-100k) minimum to be determined by each advisor who plugged into his private label solution while maintaining discretion on the assets. Both his solution and robos were designed largely to address the main goals Aaron described in this episode: An advisor wants to create scale and efficiency even without account minumums, while still retaining control of the assets inside a smaller account, and managing them in the same investment philosophy framework as those within larger accounts.

We feel that if you're going to do something more than once, develop a system for it. As Matt and Nina dig deeper into considering a robo solution and the reality of how that would actually look and feel, Aaron gives them some additional peace of mind here by pointing out that this could be a gradual transition. The ideal scenario from a scale and capacity standpoint would be for Archer's comfort level with a robo to continually (gradually) increase as they began moving existing clients to--or starting out new ones with--an automated portfolio.

I think the best outcome Matt and Nina could hope for here is that their firm would become significantly more efficient with room to take on as many ideal new clients as they like, giving them extra face time with clients to focus on comprehensive wealth management, financial planning, and personal relationships. At the same time, their clients would feel so good about utilizing the robo solution--and the accompanying high level of service--that they would continue referring new clients to Archer.

Looking forward to seeing how this story unfolds!

Joseph V. Maugeri

Joseph V. Maugeri

Managing Director, Corporate Relations, CFP Board

Matt and Nina seem to be most concerned about the possible negative effect automating tasks through the new digital platform will have on client service. The way to look at this, however, is not through the lens of client service; the focus should be on what services can be added now that certain tasks can be automated. As mentioned in the episode, services to the client at best will increase, and at a minimum will be shifted to presumably more valued services, such as coaching and financial planning.

Matt and Nina need to be concerned about filling the space that is being automated. So, the questions they should be asking should include: "How will we create more value around financial planning?", "What segments of our clients should we start to create wealth planning services that better match the complexity and needs of that client?", “What expertise or software will we need to add to deliver on this new value proposition?”

Automating tasks means creating more capacity. How will they capitalize on this change to create more value and differentiation? My fear is that they will miss an opportunity if they don't reframe their thinking about the impact of digital advice.

Vanessa Oligino

Vanessa Oligino

Director, Business Performance Solutions, TD Ameritrade Institutional

“Matt and Nina have come a long way in their thought process. Now they appear ready to move forward – with enthusiasm - with the implementation of an online advice solution. I think Aaron did a nice job explaining what the solution is, and what it isn’t, so that they can understand the true benefits -- namely the ability to effectively scale their business while providing advice to the next generation of high net worth investors. Next, Matt and Nina will need to sketch out exactly what the client experience will be for clients utilizing the platform, taking care to ensure that these clients continue to “feel the love” that has made them so successful over the past decade.

“Getting comfortable with providing different tiers of service can be difficult for advisors who have built a brand around providing high-touch support for their clients. The key is to parse out the components of the current client experience that add the most value and continue to offer those as appropriate. The activities which occur behind the scenes, such as administrative tasks, trading, rebalancing and more can be outsourced without much ado from clients.

“However, many advisors fear that their clients will perceive a decline in value if asset management, in particular, is shopped out to a third party. As a financial advisor, you most likely offer more than just money management. This is a great opportunity to sit down with clients transitioning to the new model and explain all that you do for them and the success you have had together reaching their financial life goals beyond asset management. The key to a successful transition is to be able to communicate to clients and prospects why you have chosen to implement the solution and how it will enable you to enhance your ability to meet and exceed their expectations in the future.”


Your Practice Partner

Valuable information and assets provided by Broadridge Financial Solutions, this season's sponsor of Practice Makeover.

Prosper as a Breakout Advisor

The principals of Archer Investment Management, based in Raleigh, NC, took notice when robo-advising achieved triple-digit growth over the past year. Now they're tackling the critical question that's on the mind of today's advisory firms: is robo-advising right for me?

Defining and driving success

Matt Archer and Nina O'Neal are excited. They clearly see robo-advising as a fit for their young, forward-thinking business. However, as we listen to this conversation, it's clear that some vital questions remain. Perhaps the most critical: “How will you define success—and what measurements will drive it?”

A framework for strategic thinking

It's estimated that as many as 18% of RIAs* are planning to add robo-advising services to their firms over the next two years, and this episode provides great perspective on why this should be viewed as much more than a simple go/no-go decision. It also outlines key strategic questions you'll want to ask whenever you're weighing any new service or technology.

Technology and Relationships: Finding the Right Balance

As a financial advisor, you're in the relationship business. Like Matt Archer and Nina O'Neal of Archer Investments, you've built a practice based on credibility, respect and trust.

Robo-advising and other services

In Episode Four, Archer Investment's Nina O'Neal and Matt Archer meet with technology expert Aaron Klein. He provides guidance on specific functions, parameters and tiers of service, and that prompts Nina to push back.


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