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Overcome the Robo Threat With an Advisor Dream Team

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Since the beginning of time – or, rather, the beginning of time for RIAs – financial advisors have faced competitive challenges, no different from any other industry. These challenges could come from discount brokerage firms, day traders, tax law changes or even softer challenges like keeping up with best practices – all of which pose separate threats that advisory firms eventually adapted to overcome.

The robo “threat” today is no different. In fact, just like all of the threats before it, the robo has caused advisors to think differently and strategically to carefully refine their business models to ensure that they will win — again.  They have done this by utilizing a tool, typically developed by a third party, to add value to their clients as well as their firm. This approach does not have to be limited to technology.

Advisors hold a great amount of responsibility when it comes to the financial futures of their clients. However, the idea that an advisor should be the master of all trades, wearing a Super(wo)man emblem on their shirt, is just not realistic. Their ability to provide financial planning, portfolio management, insurance planning, tax planning and estate planning – confidently and as a fiduciary – will not be sustainable in the long run.

I will go as far to say that it is a fiduciary responsibility for advisors to extend their professional network and build an “advisor dream team,” made up of trusted professionals with experience in each of the core competencies. Not only will they have more time to focus on the building blocks of their business – client relationships, financial advising and business development – but it will also show the client that an entire team of experienced professionals has their back.

That being said, outsourcing these services is easier said than done. There are factors that can cause initial reluctance, such as the cost or the inherent anxiety that comes with relinquishing control. This is where it is important for business owners to do their due diligence. When you crunch the numbers and do your research, you will find that the time gained from outsourcing non-core competencies to focus on growing your business will expand your client base and allow you to make business development decisions that can differentiate your firm in an increasingly competitive marketplace.

The first step to building this dream team is doing your research. Putting together a list of questions that reflect your, and your clients’, needs is an excellent place to start. For third-party money managers, for example, you want to be sure you are able to check the following boxes:                                                                                                                            

  1. Strong track record of performance over multiple market cycles
  2. Expertise in specific asset classes
  3. Transparency of investing philosophy
  4. Easy to understand client and advisor marketing materials
  5. Flexible managed account types and solutions
  6. Advanced technology to make the onboarding, account monitoring and reporting process simple and easy
  7. Ongoing advisor-to-client communications
  8. Value-added practice management resources and other advisor education materials

The threats to the independent advisor community are not going away. So what will you, as an advisor and potentially a small-business owner, do about it? Expand your company’s intellectual capital, and find trusted partners that allow you to look beyond the horizon without getting bogged down by non-core competencies. If you build the dream team your clients deserve, you’ll not only overcome the robo threat, but the all others that come after it, time and time again.


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