American Portfolios' Lon Dolber on Advisors & 'Life at 100'

How can you survive your practice managing life at 100 basis points all in? That’s what I’m thinking about. What do [advisors] need to manage and to survive in their practice with the number of hours they have, how many clients they’re going to have to get?

It’s not so much about opening accounts. It’s about living at 100 basis points, if not less, which mean the advisor might be living at 40, 50 or 60 basis points.

How can they do that based on their core structure that they have right now? How can we do it with the core structure that we have right now? …

The robos are not profitable. If they haven’t made any money in a rising market, what’s going to happen when the market goes the other way? …

They haven’t made money because the acquisition of a client is too expensive, but the advisor’s practices already have the acquisition.

This is the thing. If you give the client more operating leverage, the advisor, they already have the relationship. The robo found out that it was about the relationship and the cost of acquiring the relationship exceeded the small piece they were going to make through the automation of opening accounts.

That’s the game right there. The reason [robos] want to work with advisors is they figured out very quickly that the advisors have the clients, they have the relationships. It’s a relationship business.

(Related: Betterment Users Can Now Contact CFPs via App)

Subsequently, that’s the thing that we have going for us. It’s a relationship business. If we can couple that with good automation and good operating leverage, they can live with 50, 60 basis points because the advisors already have the relationships. They don’t have to acquire them the way the robo did, but the robo jumped the shark. That’s already been proven.

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