For advisors and financial professionals, “2017 is going to be bumpy,” Joshua Pace, president and CEO of Trust Company of America, said in a presentation on Thursday in Denver. “It will be business as unusual.”
Advisor custodian TCA works with about 230 firms representing 7,000 advisors, Pace said. The average account size is about $111,000.
TCA is focusing its technology on advisor services in order to help them serve clients. Pace stressed that the fundamental belief underlying TCA’s approach is that investors have better financial outcomes when they work with an advisor. “Emotions are hard to pump into an algorithm,” he said.
“We fundamentally believe that every ounce of technology, every ounce of our service model, is geared toward making sure that [clients’] eyeballs are on you, not us,” Pace said.
One of the key benefits TCA users noted, according to Pace, is a “non-competitive partnership,” cited by over half of surveyed users.
“You know we’re on your side,” he said. “We’re happily not in retail. You do what you do, and we do what we do.”
RIA Industry Trends
Although most industry observers are sounding a “steady drum beat” of the transfer of wealth from baby boomers to millennials, Pace suggested that at least for some people, that transfer may not happen as boomers are living longer and their No. 1 fear is running out of money.
That “slows the rate of wealth transfer,” he said.
He referred also to the accelerating rate of outflows from active funds to passive. Money that is still in mutual funds is concentrated in the cheapest funds, with over half of assets in the 10% of lowest-cost funds.
Pace reiterated robo-advisors’ role as a “relevant component” of financial services, but “not the be-all-end-all” for advisors. Assets under management “are starting to plane off” at robo-advisors, he said, and even the way people talk about robos – as “digital advisors” rather than “robo-advisors” – indicates a shift in the way they’re seen in the industry.
“Robo is a dirty word. Now [it’s] digital advisor,” Pace said. “If everything is all love and happiness, you’re probably sticking with the moniker you’ve got.”