FORT LAUDERDALE, Fla. – Developers of robo advice say it will grow beyond an asset allocation tool into a more proactive and complex financial advice platform, leveraging data aggregation and even artificial intelligence capabilities.

Such innovation -- dubbed by some as robo 2.0 -- had advisors attending the Technology Tools for Today Conference wondering about what's next in digital advice and how it would affect their work.

"Robo 1.0 was mainly just wealth management," says Ryan M. Flurie, an advisor with Newark, Del.-based Mallard Financial Partners. "Robo 2.0 is going to be geared toward the planning side of advice, and I think they'll be bigger competition."

Tom Kimberly, general manager of Betterment Institutional, had a suggestion for concerned advisors: engage with robo developers to ensure their offerings can help, rather than compete.

"We hear about advisors who either dismiss robo advisors as some kind of fad or don't pay much attention to it," Kimberly says. "The reality is things are changing not just because we are developing more features and capabilities and a more sophisticated product and platform, but because clients are driving that change. It would be unfortunate for advisors who haven’t shaped the solution so it serves their needs, and they don’t know how to use it or implement it in their practice.

"Engaging with it so that you know how it walks, how it talks, what your clients think about it and how they use it," he adds. "We're always reaching out to advisors to ask their input. It means what we're building are the right things to serve advisors."

Some advisors say they are impressed with the continued development of financial planning software and are implementing new tools into their practice.

"I was struck by how quickly planning software is becoming increasingly user-friendly and collaborative," says Paul Palazzo, managing director of New York-based Altfest Personal Wealth Management. "We're a full-service wealth management firm, and what's most helpful to us is to be able to tie that all together in a meaningful way."

"The key is to marry the efficiency with an in-depth program, and to be able to do it at a number of levels," Palazzo says. "We want a system so that someone can come to our website and use an overview financial planning tool to get a sense of where they stand, but then for the work that we're doing on an ongoing basis to have the opportunity to do a more sophisticated plan."  

Nonetheless, other advisors remained skeptical of the need for automated advice tools.

"Client acquisition is hard, and now all these little firms are adding robos. That doesn't solve the problem," says J.D. Bruce, president of Santa Monica, Calif.-based Abacus Wealth Partners. "All they've done is made their practices operationally more efficient. They didn't create a growth engine. Anyone that can do something with a robo, they can do it without a robo, too."


There still are many aspects of planning that cannot be automated, argues Robert Zimberg, president of Boulder, Colo.-based Financial Mountain, because clients are human and do not always act efficiently.

"Sometimes it takes two years to get that last bit of data," Zimberg says. For example, he says, the client who tells him, “ ‘Oh, you never told me that before.’ ”

"It's like a doctor relationship," adds Gary E. Zimmerman, CEO of "I come in and tell you I have a pain in my shoulder. You explore and find out no, I actually have a heart problem, it was a circulatory issue."  

Added sophistication of robos, Zimmerman notes, will only make disclosure more important on the part of digital advice firms.

"One of the challenges is that the whole thing is a black box. There's a prevailing view that the robo space is commoditized and that everyone does the same thing. But everyone uses a different algorithm. So what's the discovery process? How will clients and advisors understand the underlying differences between algorithms. How transparent are these robos about how their software works?"

Kimberly acknowledges that robos are now all closed systems that gather certain amounts of data, put it into decision-based and rule-based algorithms, then provide a limited set of outcomes.

But “robo 2.0 is an open system, where it's real time gathering data about what's going on in the market, about your behavior on the platform, what you do, your profile as an individual," he says. "And then it brings it together with probabilistic insight about you, about the entire universe of users and based on what we know about what's going on in the marketplace."


Zimberg concedes that advisor arguments against robo advice may eventually become irrelevant in the face of technological advances.

"In 30 years, they're probably right," he says. "When this whole baby boomer generation dies off. But they're never going to adapt. That's probably our shortfall, that 90% of my clients are baby boomers."

Young planners, says Mallard's Flurie, can look at how tax planners have advanced their practices even with the proliferation of sophisticated, self-service tax software.

"There are some people who don't trust technology, and I think that's something we will always have on our side," he says. "But you'll have to be better prepared. The technology is out there, and it's getting better. You can't avoid it."

And the horizon for such sophistication in digital wealth management is much shorter, suggests Alexey Sokolin, chief operating officer of wealth management platform Vanare.

What’s next, he says, is already here, demonstrated by apps such as Acorns: smart algorithms that automate money movement. It’s “technology that actually helps you do something you don’t want to do,” he says. “Imagine if I was able to cause my clients to save responsibly. That would be amazing. They could tell me, ‘Be my financial doctor. I make all these mistakes. Help me do it right.’ ”

“Nobody says, ‘I want to buy this pie chart,’ ” he adds. “They want their issues to be resolved.”

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