Are Robos Really What Your Practice Needs?
By Marcus DiNitto
While the robo advisory trend is creating buzz and making headlines all over the Fintech space, there are shortcomings to the technology that have some firms still searching for the right way to leverage it.
For higher-net worth clients or those who prefer more personal interaction, robo platforms are not yet resonating with advisors. There may be a place for the technology with younger clients who are just beginning to accumulate wealth or for those who require less intimate communication.
As the technology, operations and marketing consultant at Spire Investment Partners, Allen Eickelberg is responsible for implementing much of the technology the firm uses across all its investment practices, as well as onboarding new advisors from wire houses and wealth management shops. He’s only starting to see demand for robo platforms from advisors at Spire.
Some of the lack of demand may be chalked up to the space in which Spire operates.
“I do think there is a certain vertical of client that can benefit from (robo technology), however most of Spire’s advisors catering to higher net worth individuals are looking more toward managed money and portfolio construction solutions that incorporate separate account managers and more intricate investment products than the standard mutual fund and ETF mix of the robo platforms out there, “ Eickelberg said.
He added, “Most robo advisory platforms will tell you they play very well in the $500,000 to $1 million in investable asset space. I haven’t necessarily seen the proof in the pudding in that myself, particularly when it comes to meeting these clients’ more advanced tax and planning needs as it relates to investing.”
Robo platforms may be more useful to advisors who are looking to streamline a business that is rapidly growing in a lower net worth client demographic.
“Our advisors are looking in to utilizing robo platforms as strategy for the coming generation of young wealth accumulators,” Eickelberg said. “It’s important to engage the next generation of clients early. Although robo platforms are not yet meeting the needs of our most advanced clients, we see a lot of promise in the technology and how it could be leveraged to the future”.
Mark Butterworth of Butterworth Financial Group in Tulsa, Okla., also sees potential value in robo technology for certain clients.
”We’re trying to figure out how can we bring something like that on so that we can provide a more meaningful interaction with somebody that may not be as concerned about seeing us face-to-face or having a deep dive. They may not be at that stage in their life where makes any sense right now.”
To Butterworth, face-to-face meetings are essential for clients who want broad financial planning. Robo technology may be a better fit for clients interested only in investments, and if advisors can figure out how to leverage it effectively, the technology could be a time-effective path toward more business from such customers.
“If we can have a way to step in the door that is a technological solution for them to go online and maybe walk through a questionnaire that provides an investment model for them and it’s reasonably priced, then that might allow us to have a connection with that person that could eventually evolve into a broader relationship. Then we also don’t have to spend as much time (at the beginning of the relationship with the client),” Butterworth said.
He added, “I don’t want to get away from the personal touch completely, so I’m trying to figure out how do I integrate and manage (robo technology) on a seamless basis, the interaction of technology in such a way that it becomes more second nature for people.”
Spire Wealth Management is a Federally Registered Investment Advisory Firm. Securities offered through an affiliated company, Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC. For more information visit www.spireip.com