Advisor recruiting intensifies among hybrid robos
A new premium is being placed on filling advisory ranks at digital-first firms, as hybrid advisory platforms compete within the margins of technology and customer advice.
Personal Capital announced it opened new offices in Atlanta with the expressed intent of bolstering its advisor base. The 4,400 square foot location now houses financial advisors, a human resources department and IT specialist, according to the firm. After establishing its first hub in tech-savvy Denver in 2013, Personal Capital branched out into other hotspots including Chicago, Dallas and New York.
“We’re looking to recruit the best people,” says Kyle Ryan, head of advisory services at Personal Capital. “It’s an opportunity to go into multiple markets to continue expanding our talent pool.”
The third-largest independent robo has eyed expansion since receiving $40 million last August from IGM Financial, part of Montreal-based Power Corporation of Canada. The funding was an extension of IGM’s commitment of $75 million to Personal Capital in May 2016 as part of a Series E fundraising round.
To appeal to millennials with increasingly sophisticated needs, the new office is predicated on two-way video conference calls, Ryan says. “Advisors do end up meeting clients if they’re in town or locally — it does happen,” he says. “But, clients that are in this market, prefer the convenience of virtual.”
Personal Capital now employs 220 advisors and manages more than $7.9 billion in assets for 18,000 clients, according to its Form ADV filed in September.
New technologies will increasingly streamline wealth management and push clients toward automation, according to a 2018 report by Capgemini. Automated advisory services, like artificial intelligence apps, could increase efficiency by 45% to 55% and directly add upwards of $800 billion in economic impact in the next decade. The goal will eventually be to find top talent comfortable with dispensing advice digitally, says Vijay Raghavan, senior analyst at Forrester.
“As millennial investors themselves get older and their financial lives become more complex, like their parents, they are looking for advice from human advisors,” Raghavan says. “In the long run, the robo advisor and wealth management firms who will be successful will be the ones that offer a timely, seamless handoff, from digital to a person-to-person interaction, via phone or live chat, and provide the right level of affirmation and reassurance that customers need to ‘pull the trigger.”
Personal Capital also added trust and estate planning specialists to cater to the high-net-worth crowd, according to the firm. Almost half of the firm’s assets under management are accounts with over $1 million, Ryan says. The firm listed 1,800 HNW clients with $3.2 billion in assets on its Form ADV.
Other industry giants are following suit. Vanguard's Personal Advisor Services has been on a CFP hiring spree to bolster staff at call centers serving its hybrid advice service. The firm now has more than $100 billion in client assets. Betterment, which currently manages $15 billion in assets, launched Betterment Plus and Betterment Premium for clients that want speak directly with an advisor.
Even the wirehouses are redesigning office space to attract a younger, more tech savvy workforce. Morgan Stanley built algorithms and is using machine learning to help it 15,000-plus advisor force make trade suggestions for clients and handle more routine tasks, according to Bloomberg. Last year, UBS announced a partnership with WeWork to update the bank’s wealth management offices in Weehawken, New Jersey with juice bars and mediation rooms.
However, not all firms are looking to add a human touch. The second-largest independent robo, Wealthfront has no plans of adding advisors, preferring to remain a purely digital offering. In fact, the firm has its eye set on developing a super robo that can directly deposit a client’s paycheck and handle all of his or her financial needs on a digital platform.
Whether or not a robo platform can become that sophisticated is a subject of debate among industry experts. But there is one serious advantage for advisors looking to make the jump to a hybrid firm, Raghavan says.
“Compared to traditional wealth management firms,” Raghavan says, “hybrid robo advisors are looking for a steady salary without the pressure to sell product and find new clients.”