In response, Edelman referred back to his earlier comments about the survivability of Wealthfront. “The fact is the technology is here to stay. Whether Wealthfront survives or not—they’re the pioneers, and we all know pioneers get arrows in their back and it’s the settlers who follow them who succeed. All it takes is Vanguard and Schwab and Fidelity to say, ‘I think we’re going to get into this business.’ Oh, wait a minute, all three of them already have.”
Specifically, Edelman cited the success of Vanguard’s online service, Fidelity’s decision to partner with Wealthfront rival Betterment to offer its online capabilities to Fidelity advisors looking for a robo-type platform, and Schwab’s announcement to launch its own online service.
“It doesn’t matter who the players are; we can’t stop it," Edelman said. "We’re either going to acknowledge it and participate by providing our own clients with the same types of services, or we’re going to get crushed.”
In an extremely small sample size reaction, one advisor at the debate said he doesn’t feel threatened by the rise of robo-advisors. “I do agree that Wealthfront will grab a portion of the business, but there will be people who still demand human contact, especially when you’re talking about behavioral finance and panics and more complex financial planning issues,” said Timothy Harrington, a partner at Marin Financial Advisors in Larkspur, Calif.
“I think the advisor who survives and thrives will be someone who partners with some sort of white-label or Betterment-type robo-advisor, and uses that to help bring up a farm team of clients who are in their 30s and who’ll eventually have larger amounts of wealth and more complex situations that require the level of individualized attention that I don’t think robo-advisors can provide in their current iteration,” he said.