April 2019

By Simon Roy

This article first appeared on Bank Investment Consultant and Financial Planning

The robo advisor model promised a marriage of efficiency and cost-effective investment strategy — combining technology-assisted self-service with quality portfolios for individual investors. By automating the investment decisions, robo was expected to save us from ourselves.

But advisory firms blindly adopting the robo model actually revealed the complexities of applying technology to the traditional advisory relationship. The "slap a logo on a robo" business model has failed to meet important needs of both financial services firms and their clients.


For clients, the focus on experience and efficiency can come at the expense of service and satisfaction. Planning for retirement and other financial goals is often intimidating; knowing that human help is available can shield clients from becoming overwhelmed and not completing the task at hand. This important behavioral component is addressed by offering human touch points, to guide clients and give them confidence in taking the next step on the path to achieving their goals. When markets are more volatile or uncertain, it can help clients stay the course and avoid impulsive decisions that are counterproductive in the long term.

For banks and other financial services firms, the bolt-on robo model fails to deliver a seamless experience in servicing the client — from banking to wealth management; directly with an advisor or a branch, by phone or online. Instead of making advisors more productive, it disrupts or is seen as a threat to displace them. And instead of integrating into operational and compliance systems, it can add duplication, increase complexity, and elevate enterprise risk.

Enterprise digital advice platforms are disrupting the early disrupters, combining the best of a standalone robo (client experience, efficiency, and cost effectiveness) with the personal touch of the advisory relationship and deep operational integration.

More than technology

We see banks and other financial firms starting to embrace digital advice platforms that make wealth management easily accessible within their existing service channels. A comprehensive enterprise solution is designed to help deliver a better client experience, grow assets, lower costs to serve, and reduce complexity. The broader strategic goal is about more than just technology — it’s a path to serving the client’s wealth management needs throughout their lifetime. We think this will drive three key trends in digital advice for 2019:

  1. Goal-based approach to investing
  2. Omni-channel service model
  3. Enterprise scalability for the mass affluent

Goal-based approach to investing:
Focusing on what matters most to clients

We see the shift from an asset allocation approach to a goal-based approach to investing continuing to build throughout 2019. Clients delay gratification and invest because they care about achieving their financial goals. Goal-based investing helps firms build stronger relationships with clients, and potentially creates stickier assets. Many banks and other financial firms are evolving from a traditional transactional model or asset allocation model to one that’s based on the value of advice and guidance.

Forward-looking firms are implementing digital advice offerings that can take them beyond allocating to a model portfolio. The strategic objective is adding value with financial life management. This moves the conversation from selling products to helping clients achieve their full financial potential. For many advisors, goal-based engagement offers the opportunity to add value in novel ways and deepen the trust-based relationship with clients.

A goal-based approach can shape how the firm evaluates investment exposures and investment vehicles, and how they communicate that with clients, including performance reporting and ongoing education. It creates the opportunity to improve client satisfaction over time — from behavioral economics insights that can help clients save more for retirement to tax optimization and retirement income strategies that reflect the individual’s specific circumstances.

Clients save and invest for a reason; for example, to buy a home, fund college tuition, or retire with confidence. Goal-based wealth management focuses on what matters to the individual. This can be an empowering and engaging experience. Investment performance matters, but investors are more likely to make good decisions when they’re focused on a long-term goal rather than daily market moves.

Omni-channel service model 
Meeting clients where they want to be met

The second trend we see for 2019 is the need for firms to meet the client where and when they want to be met. Combining a digital advice platform with an omni-channel delivery model offers clients access to wealth management services in a branch, on-line (including mobile), with their advisor, or by phone. In many ways, it offers the best of both worlds, digital with the right level of human support and advice.

The traditional advisory relationship offers a highly personal client experience, but for a limited wealthy few, whereas the traditional robo offers accessibility but only a digital relationship. Integrating the best from both models gives clients access when they want it and support where they need it, while balancing the economics of the firm. An omni-channel model can also deliver a cohesive tiered or segmented financial solution for clients. It integrates the digital advice platform with the firm’s people, process, and technology. And it allows for clients to graduate between service tiers over time, as their needs evolve and their assets grow.

Personal finance is, after all, a very personal activity. Knowing that help is there when you need it is comforting and critical to sustaining and improving client satisfaction rates. An omni-channel model builds “emotional scaffolding,” so that the client knows that support is available. Adding that human layer to the investment process means a greater chance of clients signing up and staying on track with their plan. Embedding that seamlessly within the wealth management offering can create consistency by connecting all of the touch points — from chat to branch staff to advisors to outreach activities driven by the customer relationship management (CRM) system.

But consistency does not mean uniformity, because not all firms have the same value proposition and capabilities. Some may desire a more fully integrated digital advice solution across channels from Day One. Others might benefit from a phased approach, starting with an advisor-led or call-center supported program. Flexibility is key.

Enterprise scalability for the mass affluent 
Integrating digital advice to add efficiencies

Closely connected to the omni-channel model is enterprise scalability, or how a firm can broaden access to wealth management for existing or new clients. Firms inevitably need to increase the number of clients and assets that can be cost effectively managed, and service clients with smaller and traditionally less profitable accounts. What makes this possible is lower acquisition, onboarding, and ongoing servicing costs — all tied to better automation, self-service, and client analytics. In addition, firms are realizing that the investment solutions and options for portfolio operations can have a significant impact on the profitability of their small account solutions, particularly when integrated into an efficient digital advice solution.

Technology allows clients to self-service for low-value activities, adding convenience and flexibility. That frees up resources to provide value-added service to small but growing accounts and higher-touch service to larger and more complicated accounts. Some of these same automation techniques aimed at small accounts are also a benefit to larger account holders. For example, a streamlined and paperless onboarding process saves time for all clients, whether they complete it with or without an advisor.

But not all enterprise solutions were created equal, and this is where we see the trend toward scalability becoming more defined in 2019. An end-to-end advice solution that integrates systems — from CRM to custodian to portfolio management — can accelerate cost savings, lower error rates, increase operational efficiency, and reduce complexities throughout the firm. By actively engaging functions such as compliance and data security, implementation and adoption can be accelerated. Platform functionality is key; the way the platform service provider engages with the advisory firm and deploys the service impacts speed and ability to capture efficiencies throughout the organization. The enterprise digital advice platform is really solving a different problem, with a more advanced solution, compared with the bolt-on robos.

Advancing the digital advice offering

The enterprise digital advice platform is taking over where the robo advisor left off, giving clients a better wealth management experience and firms a better framework with which to grow assets, lower costs, and reduce complexity.

The evolution of digital advice has proven that while investors appreciate convenience, they need a relationship that provides support. Implementing a digital advice offering connects the advisory firm’s value chain and fosters the client relationship over time, blending what we see as the best of both traditional robo and advisory worlds.


Got a minute? Take a sneak peek and get to know Advisor Pro.

In 20 minutes, we’ll show you how Advisor Pro can work for you. Contact us for a demo.