Let's get digital: It's time for advisors to adapt

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The top executives delivered a message in unison: Digital trends are permanently changing the wealth management industry and advisors must change with them.

"If you don't adapt quickly, your clients will leave you behind," said United Capital CEO Joe Duran, sounding an alarm at SourceMedia's InVest Conference in New York.

The executives reviewed the rapid change wealth management has experienced — from the advent of robo advisors and Amazon's impact on commerce to changing investor demographics and the emerging potential of AI-driven advice.

One jarring statistic presented by Schwab Chief Technology Officer Timothy Heier: Investors spend twice as much time shopping for a car as they do their 401(k)s.

It just shows the industry has much to change in its digital approach to clients, as much of it is still rooted in the roots of ecommerce, Heier said.

"It's a massive undertaking," he said.

Envestnet President Bill Crager noted that 80% of investors now want access to their wealth management at any time of day or night, and are willing to interact with a digital advice platform.

But Crager questioned the mood of the industry in the face of digital disruption, suggesting it was an opportunity for wealth management to refine its business model.

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"Why is everyone so anxious?" he asked rhetorically. "Are the competing and market forces we're seeing now that much different than what we've seen in the past?"

In the face of industry transformation, United Capital's Duran said advisors had to focus on abilities that robots cannot perform, namely understanding human nuance and applying expertise to solve complex financial situations.

Advisors' value is greater as guides than as teachers, he added.

Advisors should also not ignore the success of Vanguard's robo advisor, Personal Adviser Services, which now has close to $70 billion in AUM, Duran said.

"Vanguard has become our industry's Amazon," he said, warning that advisors would not win in a head on competition with a similar business model.

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Still, there also needs to be acknowledgement that technology alone is not a solution, said Mark Goines, vice chairman of digital wealth management at Personal Capital.

He shared a brow-raising statistic: That among Personal Capital clients with $100,000 of investable assets, only 54% would have a chance of reaching retirement with enough saved. This was determined by the firm's planning system, which reviews life goals and finances.

Much of that has to do with how many clients still don't trust planners due to conflicted advice, he added, referencing the fiduciary rule debate. "It is an industry-created problem," he said.

It's a lost opportunity, said Cheryl Nash, president of investment services at Fiserv. The tech provider found that only 1-in-10 clients would give themselves an 'A' in investing. However, more than 1-in-3 says not they are not qualified for meeting an advisor.

Nash said the wealth management industry was experiencing a transformation in the same way that the mobile phone was changed by the iPhone. Driving that change is the use of client data, she added.

"It will be hard to manage people's wealth without all that data in one place," Nash said.

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Robo advisors RIAs Automated investing Data and information management Charles Schwab United Capital Personal Capital Fiserv Amazon