The figures that United Capital's CEO casually rattles off underpin his confidence.

The RIA now has around $15 billion in assets under management, and approximately $150 million in revenue, says Joe Duran, pointing out that $25 million in revenue will be acquired just this year. The company is looking to expand in the Midwest and Southeast. His personal goal is a quarter of a billion in revenue in the next couple of years, with $30 billion in AUM. There are plans for a white label version of its financial life management platform, and the firm will be announcing an acquisition of a robo solution in the fourth quarter.

"And we're not through the year yet," he says.

That confidence might help explain why Duran questions the robo hype. Far from being worried about upstart platforms, he wonders why they are considered a challenge at all. And he questions the acquisitions that some firms have made and the stances toward digital wealth management of others.

Incorporating digital capability into your business is inescapable, Duran tells ReinventWealth.  But quality of offerings is where advisories will need to differentiate themselves -- a proposition he says that will be more evident as firms are forced out of the business if the fiduciary proposal passes.  

An edited transcript of the conversation follows.

What do you make of the digital wealth management trend?

Betterment and Personal Capital and Wealthfront, they're all going to become like Vanguard. And traditional advisors like us who are human-based, are going to have to become like Vanguard. And everyone's going to meet in the middle, in this bionic, hybrid solution which is humans and computers, working together. It's inescapable. If you're going to run a large firm, two things are going to be inescapable. One is that digitization is going to be a huge part of it, and two, you're going to have to charge for the financial life management that everyone's been giving away. Because investment alone is going to be a 20 to 30, maybe 40 to 50 basis point game.

Raymond James has said it's not going to set robos against its human advisors.

And that is like a hotel saying, 'We don't need a gym, our people don't use it.' It's an absurd statement. And I assure you that within two years, without a doubt, they will have a robo solution. It's like a bank saying it's not going to have ATMs. Can you imagine a bank without an ATM? You will not be able to imagine an advisory firm without a digital solution.

Do you welcome that?

For most of these firms, it’s an either or question; we think it's an and question. It is never about, you’re either going to be human or you're going to be digital. The reality is everything in our lives has become a combination. It's the great synergy that's occurring. And to assume that you can deliver a service to people all over the world, consistently, and in scale, without using … really, we traffic in the business of knowledge and information. How you cannot say that we're not completely in the computer business is insane to me. So, no, [Raymond James] will absolutely be backtracking in the next couple of years.

How do you see the market shaping up? After all of Envestnet's acquisitions, some firms have wondered aloud about their relationship with them.

I don't see Envestnet ever going retail, ever. Schwab and Fidelity? Absolutely. But at Envestnet, there's no one there with the DNA for a consumer brand. I see BlackRock trying to succeed. They are the world's greatest propeller heads, but they have no idea about how to speak to consumers at all. Their answer is, we'll go spend a huge amount on a piece of technology that's already antiquated. I suspect in a couple of years that thing will still be at $600 million in direct-to-consumer assets. I really think [BlackRock's acquisition of San Francisco-based robo FutureAdvisor] was a questionable one. It was a need to stay relevant; they knew they weren't building anything themselves that could work. I don’t know if they can keep it relevant. It was a failed independent firm anyways -- it had $600 million in assets. My god, we bring that amount in a good month. When you look at the scale of these robos, they're still bringing no assets. Betterment is three years younger than us; we probably do more revenues in two weeks than they do over an entire year. They have $2 billion in assets, in seven years of history. We have over $15 billion in our ten years of history. And yet somehow they're viewed like this amazing thing. All they do is lose money. They’re not going to Uber-ize our industry, because we're not going to do what Yellow Cab did, which is nothing.

Has there been any pushback from your advisors in adopting digital tools then?

Advisors who join us typically have a 30-year perspective, and they know full well that the way that their parents worked is not how they can work. It would be like if you were opening a travel agency today, and to think you could do it without an online presence would be absurd. That's true of the financial management space; they just haven't had to have had it. But once firms like ours set the standard, everybody's going to feel it's not really a choice, they all have to do it.

There's been no pushback. There's a learning curve -- not so much the usage of technology, but rather learning how to charge for what the clients really value. When we first started the firm, we were told clients weren't going to pay us for financial guidance, because everyone gives it away for free. I said, that's because today they can afford to give it away. But what happens when people aren't willing to pay for the investments at the rate that they do? And then they aren't getting financial guidance, so you're not delivering any value. If all you're doing is wrapping a set of mutual funds and charging 1%, you do not have a business five years from now. You simply won't. But that's the overwhelming majority of the industry. I welcome this, because it ensures that consumers will actually get what they pay for. The reality is most consumers are paying 1% for absolute garbage, for something that they could do for free with Schwab, right now, with something at least as good, which is passive index investing.

Why though is there an expectation that mass affluent clients will be satisfied with a simple basket of ETFs? You buy basic necessities from a Wal-Mart, but still shop at a Nordstrom for a nice pair of shoes.

You're making an assumption that you're getting something of higher quality. What happens if that's not true? That you're paying three times as much for the same end result? This is what happens unfortunately in most of the industry. They are marketing like Nordstrom, but they are selling Wal-Mart. We have the only industry in the world where people are charged the same amount, regardless of the result, regardless of the impact you make on people's lives. And that inefficiency is going to get arbitraged away, that's all. It's inescapable. Again, why would you pay Nordstrom prices for a Wal-Mart product? 

You have to charge for what the client values and you have to have a scalable product that can deliver en masse something as squishy as advice, and that's what we've done. We've gamified everything; we've integrated everything into Salesforce. Everything can be done self-directed or with video conferencing. So we've created a deliverable about the client's life that actually is measurable, trackable and benchmarked.

United Capital's model has been described as a 'Starbucks' model. Is that unfair?

I've got the president of global innovation at Starbucks on my board. I view that as an honor and a privilege. Think about how little predictability there is on our industry, and how little trust there is that somebody's actually on the consumer's side, delivering something predictably, consistently. In scale, with a firm that's big enough to have a reputation. Who else is there? There are large brokerage firms, who are owned by banks primarily and most are not even fiduciaries. So what large national fiduciary exists? The reality is there needs to be a new wave of independent, national firms, much like what has happened in the accounting industry and the legal industry, where you get a few large firms that dominate the advisor space. When they see our tools, they will realize they aren't competing against Merrill Lynch, they are competing against United Capital. So I love that they think we're Starbucks. They are thinking, 'How are we going to beat this coffee shop?'

If it passes, the DoL fiduciary proposal will push that change?

The IBD model will implode if that proposal passes. The average BD has half of its assets inside IRAs. Overwhelmingly, 80 to 90% of their advisors aren't fiduciaries. In some cases they are dually registered but most fall to sales standards -- suitability. If this passes, they have two massive tasks. How do you get these advisors into a fiduciary standard, and how do you clean up the billions of dollars that have inappropriate investments already inside of an IRA? How long will the SEC give you to clean that up? The BD is thinking, half of my revenue streams are linked to sales that cannot happen the day this bill passes. How are we going to survive? Everyone's going to end up in the fiduciary standard. When that happened in England about five years ago, about two-thirds of independent advisors simply left the business.

Is it coincidence this proposal comes just as the market is seeing the start of a digital alternative?

I think we were going to get there regardless because of the capital forces. I think we are simply seeing all the developed markets following the same regulatory standards. England, Australia and Canada -- they are all applying the fiduciary standard, because they know people are being taken advantage of, and why should you not be held to a fiduciary standard? I mean, what's the other side of your argument? No, they should not be responsible for what you eat. That's not justifiable. And fortuitously, I think technology has allowed for the rise of the robos, and one that's just a wild coincidence, but one that plays squarely into their hands. Frankly, you can't now say, the clients can't get an alternative.

What's next for United?

We've been approached by many RIAs and BDs about white labeling our experience. We've always said no, but now we've been thinking, the market is so big, and there are so many advisors who don't want to be certified but want to do what we do. If we don’t create this market, someone else is going to go and create it. There's such a pressure on advisors. We've never seen anything like it. We can be a $100 billion dollar RIA, and I think we can be there in the next three to five years; but not if we have to acquire every single person who's going to do what we do. We can’t limit ourselves to people who must be part of United Capital.

We are in discussions to launch Finlife Technologies, which would be a white label version of what we do for RIAs who are aligned with our culture and values, and create a platform solution for financial life guidance. Lots of firms are offering investment solutions, Envestnet to name one, but nobody has taken the financial life category that we created and asked, what do the tools look like? Nobody has the plumbing and infrastructure to reach the end consumer -- the millions we've spent on Salesforce, the millions we've spent building and testing the client experience, the surveys we do to improve and evolve it. We're spending a fortune now on developing the client portal that will include this 'Ideal Life Index' and 'Years of Freedom,' a varying, engaging experience. We brought in a PhD from Northwestern in both cognitive science and engineering, who helped build Orbitz, as our chief client experience engineer. He is reinventing the portal. No individual advisor has got the $28 million we spend a year on our platform.

This platform would be spun off?

We'd keep it together. There's a lot of power in being able to test it on a $15 billion base.

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