I understand that some folks feel threatened by the robo’s low fees. If all you are doing is collecting assets from anyone who will open an account, then maybe you should be worried. In that case, you are in the same business as the robos and they have more marketing oomph than you ever will.
And marketing is an issue.
Let’s go back to Marketing 101. If the buyer believes product or service A to be equal in quality to product or service B, they will almost always make their purchase decision based on price.
This is another source of angst for advisors. In order for a low-cost provider to compete, they have to either present themselves as being at least equal in quality to higher cost providers or convince the buyer that the difference doesn’t matter. Messaging like that can tick people off.
Another basic concept in marketing is that a portion of the population that will always favor the low-cost provider simply because they buy almost everything based on price. Another portion isn’t wired that way but may buy into the “it's all the same so buy the cheap one” or the “sure, with all the extras, the other costs more but you don’t need any of the extras” pitch.
If you are making a decent effort to communicate the depth and breath of what you do and deliver on your promises, you don’t need to worry about this. The people who can’t see the difference, or won’t pay for it, were never prospective clients for you anyway. The robos can put a lot into marketing, but they will largely be competing for people that aren’t good candidates for you and the robos will be competing against other robos.
I say “decent effort” rather than something stronger for a reason. You don’t have to be a great marketer to avoid clashes with the robos. Don’t forget another basic marketing tenet: The price you charge communicates relative value.
When looking to buy something, most people assume that the low-cost provider is also the low-quality provider. Think about it. You see three premade sandwiches at a deli counter that look the same. The prices are $8, $9 and $4. Aren’t you suspicious about the $4 sandwich?
Studies show the $4 sandwich will be the worst seller because people assume it is of the lowest quality.
Who hasn’t had the experience of buying something because it was cheap and finding out just how cheap it was. If you aren’t playing the “who is cheaper game,” you are less likely to be perceived as offering a cheap quality product.