“That’s probably true, at least in our professional lifespan,” Welch said. “But I think the question assumes ‘if/or,’ but it’s not—it’s ‘and.’ As they [millennial investors] evolve in terms of means and affluence, you [financial advisors] will have evolved as well and this [automated investing services] will be part of your offering.
“This isn’t a competitive threat if you don’t want it to be,” Welch continued, adding that an advisor who spends gobs of time finding the next great small-cap value manager will have a hard time growing his or her business. Automated portfolio-construction tools, he posited, can help advisors become more time- and cost-efficient while helping them focus more on value-added services that separate them from robo-type services.
The session's panelists hammered home the point that advisors can’t stick their head in the sand regarding the potential impact of ever-changing technology on their practices.
“How can anybody in this room not think that technology won’t disrupt their practice?” he asked. “It will disrupt your business and change the way you do business.”
Steve Lockshin, founder of Convergent Wealth Advisors, asked attendees how many of them had a digital robo-advisor account. A tiny portion raised their hands.
“That’s crazy . . . that’s probably about 4 percent of you,” Lockshin said. “Every one of you should have an account at two or three of the firms such as SigFig or Personal Capital, which cost nothing. You should try them so you know what your consumers are looking at because one day they’re going to come to you and say, ‘Why aren’t you offering this?’ And you’re not going to know how to answer that question because you won’t know what ‘this’ is.”
“Integrating first means trying and understanding what’s there, and then comes adopting,” he added.