What’s in Your Digital Strategy?


Back in 2008, the first robo advisors entered the scene to little fanfare amidst a financial crisis and a deep bear market. At first, many industry experts scoffed at their ability to make any headway into wealth management, based on the novelty of thinking that investors would ever delegate the management of their investments to a website.

But as the early robo platforms improved and society at large further embraced digital and mobile technologies as mainstream, the advice industry was caught by surprise at the early success of the robo advisors. Through their elegant interfaces, aggregated wealth views, paperless account openings, mobile apps and low costs, these digital platforms solved for a lot of the client experience problems that come with working with a human advisor in traditional wealth management advice delivery.

Those early robo advisors paved the way for massive investments by the big, online brands to either acquire these digital investment management capabilities, or to build their own.  So much so, that now pretty much all of the discount brokers and major ETF product manufacturers all have a robo advisor front end.

Thus, it comes as a major surprise that after nearly a decade of this experience, a majority of RIAs are still not convinced that this technology and client experience evolution should apply to them.  Case in point: a recent benchmarking study by Fidelity showed that 54% of advisors do not have any digital strategy and do not intend to develop one. Additionally, less than a third of firms (29%) plan to learn more this year or next in order to develop a strategy.

Despite the fact that the wide-spread presence of robo capabilities are rapidly commoditizing investment management fees to low basis points, or even free in Schwab’s case, RIAs are being slow to adopt digital capabilities, putting their future at risk.

As we have seen other industries get disrupted or torn apart by technology – think of travel agents, music stores, taxi drivers, photography developers, video rentals, book sellers, the list is endless and growing – that possibility also exists in wealth management.  While no one is predicting the end of human advisors, investors will always want to seek out professional help when there is complexity and the cost of being wrong is high, traditional models will be challenged by digital platforms and advisors need to up their game in order to respond.

Industry experts and consultants all agree that advisors don’t necessarily need to launch a stand-alone robo business to get into the game, but there are plenty of opportunities to take the best of what the robo advisors provide on the client experience side and integrate those into their businesses.

“The last thing you want to do is to strap a self-directed robo silo onto your firm,” says Aaron Klein, CEO of Riskalyze, a key partner in the Black Diamond Wealth Platform, speaking at a recent industry conference. Strategically aligning your clients’ technology experience to what you are looking to accomplish with your business is the first step, Klein advises.

Klein looks at robo elements in a way that can be integrated without having to support a separate entity, including automating client engagement and account opening with an integrated digital platform that can also extend to automating the asset management component in a unified approach, not through a stand alone website.

With the powerful enhancements that continue to come from mobile technology and our collective expectations to be able to “get it now, at the swipe of a finger,” the office of the future will not be in the office at all. Rather, clients will expect to interact with their advisor through digital channels, particularly the next generation of investors slated to inherit $30 trillion over the coming decades.

Thus, consider 2017 as the year to take digital action as you finalize your annual business plans.

To learn more about how forward thinking firms are leveraging the new Black Diamond Wealth Platform and award-winning Client Portal to implement their digital strategy, check out our latest white paper here.



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Posted in Advisors, Asset Managers, Technology, Wealth Management

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