A report released in July by Jefferson National shows some perceptions about robo-advisors—that they’re taking over the industry and coming for your clients, or at least your younger, low-net-worth clients — are wrong.
Awareness and adoption of robo-advisors and robo-advice tools are low, the Advisor Authority survey found. Jefferson National surveyed 535 advisors, about two-thirds of which were RIAs. The rest were broker-dealers.
Not only have only 19% of those advisors implemented a robo-advice tool in their practice, a full 10% have never even heard of a robo-advisor.
Mitch Caplan, CEO of Jefferson National, ventured a theory as to how that could be.
“It is possible — my supposition — that the people who live in this space, you hear and breathe it every day because it’s written about in the media and there’s an endless fascination not only in the media, but also in the investment community,” Caplan told ThinkAdvisor on Thursday. “For us it feels really relevant and current, but I suspect there’s a whole universe of advisors out there who are just going about their daily business of being an advisor and don’t necessarily think of it the same way we do.”
Caplan couldn’t say if those advisors were from the die-with-your-boots-on mold and were more interested in running a practice than building a business, but he did stress the importance of integrating technology into a business to be successful.
That doesn’t just mean robo-advice technology, but it’s one example of ways advisors are innovating to build stronger businesses. The most successful advisors in the survey by “traditional metrics of points of success” like AUM or number of clients, “are ones who clearly have heard of robo-advisory,” Caplan said. “The robo-advice is just one of the tools in the arsenal of using technology. What we clearly discovered was yes, robo-advisories helped, but it was really because they were also adopters of technology.”
Of the advisors who haven’t implemented a robo solution, only 15% said they were “very likely” to do so in the next 12 months. Those who haven’t, he said, should ask themselves, “What are the technology solutions that you think you’re missing? Where are the things that you’re doing on a repetitive basis that really aren’t adding value to the client and you could use technology to scale?”
He stressed that firms in any industry that want to build sustainable, long-term businesses “recognize that scale matters, and in order to effectively scale, adopting technology can and should allow you to have a better engagement and a better experience with your client. It should also allow you to be much more efficient in your practice and therefore be able to solve a lot more on a more manageable level of cost because you’re using technology as a disintermediator.”