Despite what is commonly believed, financial advisors aren’t competing with the robos; you are competing with your own ability to provide higher value.
Robos are not your enemy but an opportunity to overcome fee compression if applied strategically. Technology has arrived whether you like it or not. Embrace what it has to offer, learn a few new things, and go deeper to provide the value that your clients will pony up the dough for. In this podcast with Cara Reisman of Betterment for Advisors, we’re going to teach you exactly how to get that done.
How does this work from the point of view of the client? Do they see the roboadvisor brand or the advisor’s brand?
Who pays? Does the advisor or the client pay?
Where are assets safekept? What are the advantages of having the roboadvisor also be the custodian as opposed to using a third party custodian?
[4:53] How in depth do the services really go? For example with tax loss harvesting. How frequently do you actually do this for the client’s portfolio, and if so what are the gains or trading cost consequences?
Betterment has over 400 advisor firms (not advisors, but advisor firms) using the platform today. How are they using this platform to scale their businesses? By automating the back office, it allows the advisor to bring their value to the table. That value may be defined by bespoke financial, tax, or estate planning. Or maybe the advisor wants to focus on business development and building relationships.
[8:59] The word “roboadvisor” means so many things. Is Betterment still a roboadvisor, really?
[11:44] How advisors who want to massively scale their businesses can use roboadvisors. These platforms are tools that you can use strategically. They are not the competition; that is a myth. A common use case is an advisor who is focused on wealth management as opposed to investment management. Perhaps they want to stay in touch with next generation clients but don’t want to suffer through serving clients who don’t meet their minimums, perhaps the children of their affluent clients. Yet at the same time they want to be there 20 years from now when the client inherits wealth or finally does reach the level of assets you’d desire. You can streamline the operations so that ultimately you are position to go full service when the right time comes.
And you can do this profitability using this technology.
It’s not about changing your entire business. It’s not exclusive. You don’t have to use a platform like this for all your clients, just the ones where it makes sense.
[15:50] What roboadvisor platforms should advisors consider as options, and what are the benefits and drawbacks of each?
[20:19} Three action items that advisors who are thinking about using a roboadvisor should take.