There seem to be endless discussions these days about the so-called robo challenge. For my own speeches, though, I’ve become more interested in a broader discussion about the way the profession is evolving.

The real question, in my mind, is: How can advisors turn a perceived challenge into an advantage?

Let’s start with portfolio management. What some have called advisor alpha is becoming visibly commoditized by online investment platforms that automate tax management and opportunistic rebalancing.

Advisors can more efficiently serve their existing clients if they leverage the institutional versions of the new technologies; the planners build portfolios in the first sit-down meeting with their clients, and then have Betterment, Upside, Jemstep or one of the other online services robotically crank out the alpha factor.

Advisors can save money by not having staff do this work by hand, which boosts margins; owners can use that extra time for increased service and ongoing financial planning advice.

The online service providers are also the profession’s best opportunity to work profitably with middle-market consumers. And frankly, that’s something advisors will eventually have to do if financial planning is to become a “real” profession. (Do doctors, attorneys or plumbers only work with individuals who have significant portfolios?)


There are several advantages here. Most firms already (but reluctantly) take on “accommodation clients” — children, friends or relatives of profitable clients. Now those assets can be managed by the online investment platforms, and the firm can provide appropriate (read: less) in-person advice and face time. Under this model, an accommodation client suddenly becomes a profitable one.

A second advantage is marketing. Most planners I talk with are not actively seeking referrals because whenever they do, they get 10 prospects who don’t fit their revenue model for every one in their sweet spot.

If they can automate the portfolio management, it allows them to turn on the referral spigot all the way, without cringing at the unsuitable prospects that will ask for appointments or having to find a graceful way to turn these less wealthy people away — a move that could piss off referrers, who may be among the planner’s best clients. 

The middle-market prospects can fit into the same model as the accommodation clients. Presto! Suddenly financial planning advice is available, as needed, to a much wider spectrum of the public.

A third advantage is less obvious, but potentially more beneficial in the long run. Many advisory firms were built around a charismatic founder who was able, against the odds, to sell a service (financial planning) that nobody had ever heard of before. Now you hear those founders complain that the successor generation lacks charisma, doesn’t have much in the way of sales skills and is too young to credibly market to the firm’s wealthy target demographic.

Advisors despair of the viability of their firms when the reins are handed over and become increasingly strident that the successors develop marketing skills. Get out there, you 20-something successors, and bring in a bunch of wealthy pre-retirees and aging decumulators!


The online portfolio management platforms are a made-to-order way to change this dynamic. They allow the successors to focus on marketing to their peers — a cohort of less-wealthy, hungry accumulators — at the same profit levels that the firm currently experiences with clients who meet the investment minimums.

These younger, tech-savvy clients are far more compatible with the online investment experience than with those ancient, chiseled-in-stone, quarterly performance statements. As the successors attract their generational peers, the firm’s “portfolio” of clients becomes a healthier mix of accumulators and decumulators, rather than people approaching their last breath and spending down their AUM.

If you look a bit further into the future, you can see even bigger transformations for the profession. One thing that is seldom recognized is how the robo platforms have automated the client onboarding paperwork. As this becomes the norm in the profession, it will be far easier to add new clients more quickly than ever before.

Beyond that, while most of the profession’s attention has been directed to the “threat” of online investment management, few have noticed that other aspects of the planning service are being rapidly automated. Using PreciseFP, for instance, advisors can have clients input a great deal of their personal information, using account aggregation to avoid having to key in the portfolio information manually. The data automatically populates the advisor’s CRM, portfolio management and planning software, and a forms generator like LaserApp.


And a host of new robo planning systems are creating entirely different vectors toward middle-market clients. MoneyGuidePro now offers MyMoneyGuide Lab, a consumer planning platform that advisors can make available to less-wealthy clients and 401(k) plan participants.

Two new entrants to the field — Wealthminder and Advizr — were designed to sit on an advisory firm’s website so that prospects could explore their options and co-create plans at far less internal cost to the firm. Both products let advisors avoid creating plans from scratch: Instead, they use their time to help new clients scale down the optimistic double-digit annual return assumptions they’ve entered into the retirement calculations, and recommend a better charitable gifting plan than presenting the church with stocks whose market value is considerably below what was paid for them.

Another path for the middle market is provided by two other programs, eMoney Advisor and a new entrant called Oranj. Both make it extremely easy for clients to upload and organize their financial data online on an advisor’s website — largely without the firm’s intervention, if that’s the preference.

These digital financial organizers let consumers see their financial life at a glance and dig deeper into any aspect of it. They provide updated account aggregation on all investment holdings, plus instant access to checking account balances, credit card and mortgage debts and liabilities, 529 account balances, insurance policies and everything else.

Younger advisors who cater to Gen X and millennials report that this service is where their peer clients find the most value in an advisor relationship.


The bottom line here is that the profession is moving rapidly toward a cyborg service model that will be more efficient (less data entry, no manual rebalancing or tax-loss harvesting), more comprehensive, more collaborative and more welcoming to a broader segment of consumers.

We’re moving into an era of improved margins and a solution to the “problem” of next-generation marketing as founding advisors pass on the reins of their firms.

New technologies will be perfectly suited to a new generation of clients, and allow the profession to, finally, provide advice profitably to anyone who needs it.

Rather than a post-apocalyptic wasteland where humans are steamrolled by the robotic competition, I’m envisioning an increasingly productive partnership between the two complementary service platforms. The software will do what new software has always done: make the indispensable person who provides wisdom, advice and guidance more effective, efficient and profitable.

You can fight the robo trend if you want to, but you’ll do a lot better if you join it instead. 

Bob Veres, a Financial Planning columnist in San Diego, is publisher of Inside Information, an information service for financial advisors. Follow him on Twitter at @BobVeres.

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