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Voya Financial voyages into hybrid robo advice

Voya Financial is going robo, the second major player to do so last week.

The announcement of the platform, designed to help its advisors become more efficient and better communicate with the broker-dealer, comes a few days after JPMorgan Chase rolled out its new portfolio offering, You Invest Portfolios.

Financial advisors often turn to robos to help broaden their client bases since they can be entry points for new investors, says Andre Robinson, Voya’s head of Advisory Solutions.

Voya's move is “clever," says Jen Butler, the director of brokerage research at Corporate Insights. "It’s a way for their advisors to move downstream.” The firm’s hybrid model will have an advantage because it’s not a direct-to-consumer, Butler adds. The robo will offer active investing options, which can mean higher fees. “It’s higher than most hybrids. Investors are more likely to get a higher-touch experience,” Butler says.

Voya Financial Advisors IAG
Voya Financial Inc. signage is displayed on a monitor on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 1, 2017. U.S. stocks rose and Treasuries declined as reports showing a gain in consumer sentiment and a rise in manufacturing offset a mediocre August employment report. Photographer: Michael Nagle/Bloomberg

Voya Digital Advisor has two options: strategic and tactical. One is a passive portfolio with an account minimum of $5,000 and a 1% fee. The other is active with a 1.1% fee and a $50,000 minimum, which will be lowered to $25,000 by quarter-end.

“In theory, yes, it will allow [advisors] to go downstream. But in practice, the mass affluents are interested in this as well,” says Robinson, adding that the first account to sign up with the digital advisor had $100 million in assets.

Voya’s advisors anticipate the technology will help boost growth by as much as 10%, the company’s survey found. That’s why Voya decided to build the hybrid model, Robinson adds. One concern: automated-only investing options can be seen as competition by advisors.

“This is a robo available through an advisor,” Robinson says. “It can be low touch to high touch.”

Back in 2017, Voya’s president Tom Halloran told Financial Planning the firm was more likely to buy a robo rather than build it in-house, but the independent broker-dealer decided to start with a blank canvas to fit advisors’ needs.

“We opted to build internally,” Robinson says. “We felt like it would be better if we could personalize the experience for what our advisors were looking for.”

Envestnet was brought in for consulting and the firm added some technical capabilities such as the client dashboard.

Robinson adds that a hybrid model will spare clients the trouble of transitioning. That’s because robos are often used to attract new clients, but if a consumers’ net worth increases, their needs change and so does their use of robos. In addition, there can be the hassle of switching to a human advisor from an automated one.

“If you look at the history of Voya, we always had an intermediary and our intermediary is the advisor. We wanted to bring that over in this space,” Robinson says.

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