In recent months, the conversation about robo-advisors has shifted. While some have feared the challenge they pose to human advisors, others have come to see them as a tool that could provide access to new clients and opportunities.
Miami-based Ladenburg Thalmann Financial Services, which became the first independent broker-dealer to enter the digital advice space last month after rolling out its own robo-advisor, $ymbil, also believes that instead of competing with its own advisors, it’s offering them a powerful tool to access new clients.
$ymbil’s investors, like other customers on other digital advice platforms, will be matched up with one of the company's 4,000 individual advisors, but the twist is that the advisors will be making the referrals.
Phil Blancato, the CEO of the broker-dealer’s asset management arm, Ladenburg Thalmann Asset Management, says, “We felt like there was a lot of concern among our advisors about how the robo-advisor trend would impact them. Rather than following the trend of going directly to clients, we decided that forming a partnership with the advisor was a more effective way to deliver digital advice. In this case, advisors are being compensated as solicitors.”
The firm intentionally targets low-asset millennials: $ymbil's first clients are likely to be the children and grandchildren of existing clients, Blancato says.
“We recognize that millennials are strapped,” Blancato says. “The last thing we want as a financial services company is to not serve a generation of people who really need our help. I have millennial employees coming out of school with hundreds of thousands of dollars of debt. Offering them a low minimum gives them a foray into what it means to be invested for the long term. The reality is that at some point these millennials are going to inherit large sums of money.”
$ymbil comes with a minimum account size of $500, offering a previously unreached investor population access to Ladenburg Thalmann’s strategies.
“Over time, I could see us bringing in more portfolios,” Blancato says. “This gives the $500 investor an opportunity to work with an institutional money manager.”
After a short on-boarding process involving a simple risk tolerance questionnaire, $ymbil places clients in one of five portfolios actively managed using Ladenburg Thalmann Asset Management’s globally diversified strategies.
“Once we have an understanding of where they fit from a risk standpoint, we’ll invest them in one of the five portfolios we’ve already managed for the past 30 years,” Blancato says. “We use ETF portfolios that have a proven track record, and the client can change their score as their personal economic situation changes.”