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Episode 2: How to build a thriving robo practice

November 05, 2015 @ 2:19 pm

Runtime: 8:01

Adding a robo-platform and succeeding with a robo-platform are two very different things. Aaron Klein and Ray Sclafani offer advice on how to create a profitable practice with a robo-arm.

The Renovation Room

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

Vanessa Oligino

Vanessa Oligino

Director, Business Performance Solutions, TD Ameritrade Institutional

"I think it’s a great move to bring in not only a traditional advisor coach, but also a technology expert to help Archer implement an online advice solution. In our experience in working with advisors, many are under the assumption that these solutions are “plug and play” and often have a rude awakening as they begin to dig into the details of what’s available and how they can make it work with their existing technology infrastructure. Having access to these two individuals should help the Archer team avoid the most common pitfalls."

"As advisors begin this process, they need to ask themselves what they are trying to achieve by adding these new capabilities. Are they looking to serve a different type of client? Are they looking to enhance the experience of their existing clients? And, most important, how will an online advice solution help them achieve their strategic goals? Armed with the answers to these questions, they can begin a meaningful search for a vendor partner that best fits their needs."

Kelly LaPalio

Kelly LaPalio

Vice President of National Accounts, FocusPoint Solutions

As Ray and Aaron begin their process of sitting down with Matt and Nina to discuss their game plan and strategy for incorporating a robo solution into their practice, the advice and concerns they voice remind me of the conversations we have with many advisors who are looking to make changes to their business. As with any other major business change (switching custodians or broker/dealers, updating an investment philosophy or process, bringing on a new advisor or client-facing team member, incorporating new technology such as CRM or reporting software, etc.), implementing a robo into a financial practice presents many areas to consider.
It doesn’t make much difference how big or small a practice may be—no advisor likes the idea of possibly losing clients due to disruptions caused by a change in the business. In an interesting InvestmentNews Survey, Matt points out that of 400+ advisors interviewed, only 7% are already using a robo solution, 18% are considering using one in the next 1-2 years, and 41% have no intent of using one at this time. I love Aaron’s robo/TurboTax analogy. Whether or not an advisor incorporates a robo into a practice, the majority of end clients will likely not want give up their advisor, and many complicated issues simply cannot be addressed with just a robo solution.
I don’t think many advisors would argue that, as Ray points out, there is no shortage of consequences—both intended and unintended—to consider throughout the implementation process. Common concerns surrounding robos for many advisors are account minimums, how they will convert smaller accounts to the new robo model, and/or how they will handle compliance with a robo now in place.
As with any new opportunity or change, it’s important to realize we don’t know what we don’t know—that being said, there are lots of other considerations to take into account. On top of all of this, we know that every advisor’s clients and practice are unique. This is where having access to an experienced consulting team/sounding board makes a lot of sense. Every time an advisor chooses to work with our firm’s outsourcing services, our consulting and operations teams create a custom transition plan based on the advisor’s specific situation and needs.
When making any major business change, we always encourage advisors to talk with their biggest client advocates first. These client conversations (which can be a sort of practice round) can help advisors build confidence and passion about the positive changes they’re choosing to make to their business.
Something else to consider is how reports or other pieces will now *look* visually to clients, and to make sure those things look even better than they did before the change. Coming up with a communication plan that focuses on how and why an advisor expects a major business change (such as adding a robo and/or the items discussed above) to be beneficial for both the practice and its clients is key. If an advisor is excited, well-informed, and optimistic about a change, this positivity spills over to clients and they become excited and energized, too.
We find that often times, advisors going through a transition are pleasantly surprised to discover that the fears, concerns, or objections they may have anticipated around implementing something new were mostly in their own minds—not their clients’.
By creating a well-structured plan and really thinking necessary steps through with careful planning, advisors can move through a major business change smoothly and efficiently. Will there be surprised or hiccups along the way? Absolutely. But having and sticking to an evolving plan throughout the process of making big changes helps advisors to experience a higher level of success.
I’m looking forward to seeing how Ray and Aaron’s conversations with Archer play out in upcoming episodes.

Joseph V. Maugeri

Joseph V. Maugeri

Managing Director, Corporate Relations, CFP Board

As they consider this possible changeover, they will be creating more capacity for their practice. Many of their clients, hopefully, will be migrating over to this online platform for some of their servicing and advice needs. This represents the most exciting opportunity for the practice to use that additional capacity to deliver more value added services, such as more integrated, holistic advice, that gets deeper into their clients financial lives.

How will they prove their clients are receiving more value? One way would be to hire another junior financial planner to help deliver this more comprehensive approach, so the human touch is actually being increased at the same time it is elevated into hire value areas. This can enhance revenue to the practice, especially if they are qualified by virtue of having a CFP certification. In a recent study we conducted, advisor revenue was 80% higher for those who had the certification.

Here, reminding clients of their credentials and expertise will demonstrate, that the technology is meant to be an enabler, not a cost reducer, which will compliment and not replace the human advisor. This could send a powerful message that this change will ultimately result in better financial outcomes for their clients.


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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