The Envestnet Advisor Summit opened Wednesday afternoon with an address by CEO Jud Bergman, who greeted the 1,600 total attendees by addressing the robo-advisor challenge.
He used the metaphors of Metcalfe’s Law — that the value of a telecom network is proportional to the square of the number of connected users on the network — and the lessons of James J. Hill, the Great Northern Railway builder, to suggest that advisors and their clients will be the greatest beneficiaries of the digital, cloud-based network, as advisors “leverage their human and intellectual capital” to clients’ benefit.
It was Hill’s railroad, Bergman said he learned from his historian father, who connected lumber mills with home builders, iron ore mines to steel mills, benefiting many more people than just himself. That is Envestnet’s goal, Bergman said—to build connections between advisors and software makers, asset managers, broker-dealers and custodians. “As we continue to expand” the Envestnet network, “most of the value of that network will be created and enjoyed” by its users, he said: advisors and their clients.
But like Hill’s quest to find a level roadway through the Rocky Mountains between the Midwest and the Pacific Northwest, Bergman said he believes that “ many advisors have a digital divide” that serves to separate them and their practices from a “more complete engagement with their clients,” and especially with millennial clients, who prefer a digital engagement with their advisors. Those advisors “are stuck on the eastern side of the Rockies,” which is regrettable because “there’s no industry on earth more conducive to leveraging digital technology than the wealth management business.”
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He promised that the acquisitions that Envestnet has made and the programs it has built and will announce at the Advisor Summit will help advisors “cross that digital divide.”
He also said that there are “three things we can thank robo-advisors for,” including: