Robo Advisors: Beating Back the Challenge

Assets managed by robo-advisors have skyrocketed in recent years as investors gravitate toward their low minimums, low fees and their digital experience.  What’s and advisor to do?

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    Robo Advisors: Beating Back the Challenge

    Robo Advisors: Beating Back the Challenge

    Technology is disrupting industries across the economic landscape, from banking to taxi cabs and from hotels to money itself.

    Perhaps the biggest disruptor in the wealth management industry is the emergence of robo-advisors, which are structured as algorithm-based portfolio management software.

    Assets managed by robo-advisors have skyrocketed in recent years as investors gravitate toward their low minimums, low fees and their digital experience.

    This challenge is set to grow as these robo-advisor firms invest more capital into big data and advanced analytics, which may lead to greater personalization of advice.

    You may even see that asset managers and insurance companies adopt these tools, effectively becoming new players in the wealth management space.

    What’s an Advisor to Do?

    You could ignore the whole trend and convince yourself that your target market prefers a human advisor. That might work in the short-term, but it won’t in the longer term.

    A Framework for Competing with Robo-Advisors Today

    1. Strengthen Your Brand: People are willing to pay more for a product when they perceive a quality or value worth paying for. Ask your clients what they value most from working with you. Be sure to list all the services you offer, and make sure to share this with your clients and prospects so they can see what they are paying for. And, always deliver your value on a consistent basis.
    1. Develop a Specialty: Technology has commodified any number of skills, and portfolio management may be just another in a long list. Becoming a specialist protects you from being commoditized. Your specialization can be in any number of areas, from retirement income strategies to alternative investments; choose one and build your skillset.
    1. Create a Virtual Family Office: Network with accountants, insurance agents and attorneys to develop a virtual family office that can address the myriad financial needs of your clients. Robo-advisors can’t match this kind of detailed approach.
    1. Keep in Contact: Stay connected to your clients through periodic communications, alerts and meet with them face-to-face on a more frequent basis. Consistent contact reminds your clients that you are ever vigilant about ensuring their financial success.
    1. Reconsider Your Fee Structure: An inclusive asset-based fee may be how you price the your package of services today, but consider lowering your advisory fee to better compete with robo-advisor fee levels and adding an annual retainer that reflects the value of the other services you provide.

    Staying competitive in a challenging landscape by utilizing any of these suggested pathways will help you keep your eye on the ball for the long term. Taking a proactive approach to change is not only preferable to ignoring the inevitable, it goes a long way toward positioning your business for the future.


    See referenced disclosure(s) (1) at .




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