Over the course of the last few years, many advisors have changed their views on robo-advisor services and the technology platforms upon which they are based.
Rather than be concerned about potential disintermediation, advisors are now looking at the potential for robo platforms to expand their business base. Not surprisingly, the robo platform providers are also looking to traditional advisors as a key source of growth for their product and service offering.
Why? Because in spite of the fact that the leading national robo-advisors have raised a significant amount of capital, with Wealthfront securing $64 million in November of 2014 and Betterment securing $60 million in February of 2015, growth within this sector has leveled off. According to the consulting firm A.T. Kearney, robo-advisors control about 0.5% of investable assets today, and it is likely that this will grow to no more than 5.6% by 2020.
However, the potential for robo platform tools such as portfolio management systems, auto-rebalancing, tax-loss harvesting and reporting to assist traditional financial advisors in cost efficiently expanding their client base remains quite appealing. The ability provided by these tools to offer a second, less staff-intensive tier of service is significant. Thus, the ability to attract and service both younger investors, with lower investable asset levels or mature, tech-savvy investors who desire more of a direct hand in the management of their portfolios becomes a very real possibility.
The good news, according to research results released by Jefferson National, which surveyed over 500 advisors, is that 19% of the survey respondents indicated that they had already “implemented a robo-advice tool in their practice.” Of note, those advisors utilizing robo-advice tools had deployed them with both millennials and boomers, and “more than half” were using them on clients with more than $1 million and 20% with clients who had “over $10 million in investable assets.”
The question becomes, “How does a financial advisor go about attracting prospects from these particular target audiences?” The answer is likely that it will require a slightly different marketing mix, with some adjustments to their messaging, than that which the firm currently employs in its practice development efforts.
Fortunately, excluding the selection and implementation of a robo platform service provider, the adjustments required to find, convert and service clients interested in an automated financial management platform are relatively straightforward and not all that expensive.
An obvious starting point is the need for a mobile-friendly website, ideally with an integrated blog for posting articles on the benefits of this technology-aided aspect of the firm’s offering. The website should also incorporate functionality such as client custodial account access and secure document sharing to assist with ongoing client service needs.
Additionally, if not already being utilized, the firm should select a web-conferencing and video-conferencing service provider to facilitate periodic “touch base” meetings, albeit remote, with their robo-advisor clientele.
In terms of boosting visibility for this service and generating leads, the firm should strongly consider either beginning or expanding their use of digital marketing tools such as search engine marketing, email and social networking. This will allow the firm to provide investor-ready content and robo platform service overviews to clients and prospects alike on social media portals such as LinkedIn, Twitter and Facebook, boosting traffic to the firm’s website, where visitors can learn more about this aspect of the firm’s offering, while simultaneously enhancing its lead capture efforts.