DALLAS -- As the threat of robo advisor competition grows, will you survive, thrive or die?
Thats the question Deborah Fox, founder of Fox Financial Planning network, posed to an audience of advisors at the T3 conference.
Im not really against robo advisors, Fox said. Im actually pro-robo advisors. She quickly explained that she is a practicing advisor who views robos as a tool for planners to utilize.
In addition to viewing robos as a tool, Fox believes that the changes they are creating in the industry are positive and overdue.
The things that are necessary to compete with the robo invasion are the exact things that we should have been putting in place regardless of that disruption, she said.
Fox believes that by putting the following six practice management and technology solutions in place advisors can protect themselves from the competition that robo advisors bring.
1. Automate business process management.
According to Fox, less than 5% of firms have documented business processes in place. With such a system in place, advisors will have more time to develop client relationships separating themselves from their robo counterparts.
Now it goes beyond just having systems and documented procedures in place, Fox said. You have to take it to the next level. And the next level is getting these processes inside technology.
One example of how to automate business processes through technology is through a client meeting system, Fox explained. Clients can be sent emails and texts through a system which no longer has to be done manually by an advisor.
Fox assured the audience that she understood how difficult it can be to adopt a new system. She's lived it. It took her firm nearly three years to fully integrate its new business processes. It was painful, she said, but it was, by far, the most important thing that we ever implemented in our firm.
2. Automate and personalize prospective and current client touches.
Advisors should be tailoring their messages for clients by using technology such as social media or a website.
I admire people who are power users of social media, Fox said. I am not that great at social media but you dont have to be.
Indeed, consulting firms and websites can help advisors gain a following in social media but advisors should, at the very least, be using LinkedIn because many of their prospective clients will find them there.
Fox said that it is also imperative for advisors to update their firms website to target specific prospective clients. If you have an old website that hasnt been changed in 10 years, youre not getting the search engine optimization you should be, she said.
3. Have a multi-year technology plan.
There should always be technology on your wish list, Fox said.
This is technology that a firm cant afford to purchase or doesnt have a need for yet but will in the future. Fox explains that firms should be looking roughly two to three years ahead to budget and create a plan to integrate the new technology.
There needs to be an actual adoption and implementation plan, Fox said, noting that recent advancements in technology in the advisor space have made the adoption of new systems easier than in the past.
4. Offer a client portal.
This is mandatory as far as Im concerned, Fox said when speaking about client portals. Its a piece of technology that our clients appreciate the most because they can see everything.
She said that in addition to millennial clients many Gen X and baby boomers also want to access their information 24/7. In addition to allowing the client access to their information, it provides vital data for advisors as well.
5. Utilize model portfolios in combination with a portfolio management system.
Its so important to standardize the investment process, Fox said. There are so many firms that we see that have investment allocations that are all over the place.
She said that it is almost impossible to manage because there is no standardization. With that she explained that there are firms with over 20 types of model portfolios but because they are in a system they are easily managed. You just need somehow to standardize the process, she said.
You have to have some way of managing that portfolio in a way that doesnt cripple you because if youre doing it manually it will be the single most labor intensive task that youre doing within your firm.
6. Partner with a robo advisor.
Certain robo advisors have identified that partnering with advisors is a smart option, Fox said.
On the investment side, teaming up with a robo advisor makes sense, she said. Advisors can gain model portfolios, a portfolio management system and an account open system all in one package. Also, regulators like the grouping of these systems, according to Fox.
[Regulators] love this model because they know all the things that are supposed to be done for investors are done automatically with an audit trail, she said. So it takes a lot of compliance off your shoulders also.
However, one of the big fears is that a firm will choose the wrong robo advisor to team up with. There isnt a definite answer as to which robo advisor to work with, she says, so advisors need to do their homework.
"Anytime youre in the early stage of technology there is going to be some barriers that have to be overcome, she said. I believe this will get easier over time.
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