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February 17, 2015 at 05:41 AM
David Edwards, president of Heron Financial Group Wealth Advisors, is launching a pilot project to add a web-based robo-advisor business to his firm. To be called HeronWealth.com, the digital advice platform will offer Betterment Institutional’s robo-investment software along with eMoney Advisor’s new emX Select financial-planning tools.
“We’ve got 30-year-olds who want to be involved in this. Every 30-year-old we’ve talked to wants to do this tomorrow,” Edwards said while attending the Technology Tools for Today (T3) conference in Dallas, which gave advisors their first look at emX’s dashboard.
Considering that Fidelity Investments announced earlier this month that it is acquiring eMoney Advisor, it’s a sign of the times that Heron is moving forward with a robo offering — even though some advisors remain wary of the robo trend and are resistant to adding such digital technology to their practices.
However, Michael Kitces, director of research for the Pinnacle Advisory Group and author of the Nerd’s Eye View blog, said it’s no surprise that robo platforms are courting advisors who want advanced technology to do automated allocation for clients.
“If they were making money rain from the heavens going direct to consumer, you would not see about three-quarters of the robo-advisors pivoting to advisors,” Kitces said. “There’s already a lack of trust in the asset management industry, and investors aren’t going to hand you money just because you have an automated website.”
Kitces added that the emX dashboard was the most impressive technology he saw at this year’s T3 conference.
Edwards, meanwhile, believes that the “holy grail” of wealth advisors is to put together a collection of best-of-breed applications that synchronize data and offer new clients a starting point for wealth management.
Heron Financial Group’s minimum is $1 million in investable assets before the firm will take on a new client. But HeronWealth.com, which is scheduled for a soft launch on March 31, is designed to attract the children of current clients — younger people with high income and no real assets, Edwards said.
“They’re earning $250,000 building websites annually but still paying off $80,000 in debt,” Edwards said. “If I tell them, ‘Come back to me when you have $1 million or when you inherit $1 million from your parents,’ I’ll never see them again.”
The investment so far in HeronWealth.com is $40,000 for the new website’s technology and staffing, or 20% of the larger firm’s annual marketing budget of $200,000. Edwards doesn’t expect to make much more than $5,000 off the platform in its first year.
