The Elements

By Ironstone   |   October 13, 2015

Hear From Your Peers – How To Robo-Proof Your Financial Advisory Firm

Categories: Blog, Business Model, Strategic Planning

 

 

“Hear From Your Peers” is an excerpt from our article – How To Robo-Proof Your Financial Advisory Firm. Read the full article here.

The robo-advisor and its collision with traditional advisors has become a media staple. Conversations focused on robos and the changing landscape of technology take center stage among financial advisors and industry leaders. Warnings of fee compression and competitive automated services that robos provide are abound in the headlines.

There seems to be no argument that robo-advisors are driving change in the financial services industry. The debatable questions holding strong are, “To what degree is the robo invasion imposing threats in the traditional advisor space?” And, “Is there an urgent need to compete with them to remain viable?”

We interviewed Evan Shear-CFP®, founding partner at CrossleyShear Wealth Management and Rex Whiteside, President of Whiteside Wealth Management, Inc., to get their thoughts on the digital disruption.

In our interview we explore:

  • How each feels robo-advisors have or will impact their firm
  • What investors want that robos can’t provide
  • What steps, if any, is the firm taking to stay competitive with robos
  • How digital technology is evolving in the Financial Services Industry and their firm

Here’s what they have to say:

Evan ShearEvan Shear-CFP®, Founding Partner at CrossleyShear Wealth Management

Q:  How do you feel robo-advisors have or will impact your firm?

A:  “I think the idea of a robo adviser should wake all of us up in that we need to refine and strive to differentiate ourselves and our services offered. We don’t feel it will diminish our practice. We could lose some that don’t need or want real advice from real people, but those are not the type of clients we wish to work with.”

Q:  What, in your opinion, do investors want from advisors that robos can’t provide?

A:  “People want someone that can relate to their concerns, issues, problems, and dreams. A machine cannot do that. A machine doesn’t know the pain of losing a parent and how to deal with the costs associated with caring for a loved one. We have lived those real life events and can apply our experiences with our clients.”

Q:  Is your firm taking any steps to stay competitive with robos? If yes, what steps are you taking, what challenges have you encountered, what was successfully implemented, and describe the results you have experienced.

A:  “Always move forward and provide the best possible personal service we can.”

Q:  How do you see digital technology evolving in the Financial Services Industry and for your firm?

A:  “Digital allows for quicker access to share info with our clients. We have to be careful of not to be too digital that we forget the physical.”

Rex Whiteside

Rex Whiteside, President of Whiteside Wealth Management

Q:  How do you feel robo-advisors have or will impact your firm?

A:  “It has caused us to raise our level of service in planning as investment management has become less of a differentiator. Just as younger and smaller investors have benefited from the automation of investment management, advisors are also benefiting. We have been able to increase our services at a lower cost and with less staff.”

Q:  What, in your opinion, do investors want from advisors that robos can’t provide?

A:  “Investors need/want solutions to holistic planning and investment management. With a robo you can attempt to align your investments with your risk tolerance but how do you tie your investments to your financial goals and needs? We also find one of the largest aspects of successful investment management ties into behavior. This is behavior during both good and bad market cycles. Understanding the client’s state of mind during periods of fear and greed avoids possible tragic mistakes. When emotions enter the equation, I think the automated robo advisor falls short.”

Q:  Is your firm taking any steps to stay competitive with robos? If yes, what steps are you taking, what challenges have you encountered, what was successfully implemented, and describe the results you have experienced.

A:  “Increased efficiency by going paperless, process oriented but customized investment process, using Riskalyze.com to better understand our clients’ true risk tolerance and then match it with a customized investment solution, full holistic Wealth Management Plan encompassing client’s entire financial life; prioritization of what issues need to be addressed and coordination with client’s other professionals (CPA/Attorney), performance reporting that centers around their needed return and not just benchmarks-very simple to show clients if they are on plan, goal planning and monitoring, and clear job roles for all staff members with client interaction (client understands there is a team working for them).”

“Results have been that we are pulling a lot of assets from Vanguard and Schwab lately. Our clients are smart enough to manage their own money but realize they do not have the time or desire to keep track of their plans and investment management.”

Q:  How do you see digital technology evolving in the Financial Services Industry and for your firm?

A:  “Just getting started and will continue to improve. I think the industry as a whole will continue to see fee compression. This is especially true and already happening with HNW clients. I think the MF and SMA industry will continue to have a hard time justifying their fee structures to both clients and advisors. If you are a beta replicator and you have high fees, your days are numbered.”

 

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If you have a comment or question, want to work with Ironstone or our affiliates, contact us at 1.800.917.8020, email us at Info@IronstoneHQ.com, complete our “contact us” form, or join the Ironstone – Financial Industry Professionals Practice Management Group on LinkedIn and start a discussion.

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