embrace

Instead of viewing robo-advisor platforms as the competition, advisors should focus on the opportunities they present. First, adding the new technology to your service menu can help you more fully articulate your value proposition to clients and prospects. Second, these platforms can add efficiency to your practice, increasing your profitability and, possibly even more importantly, helping you economically serve clients who may have limited assets today but over time will have more dollars and more complex planning needs.

The role of advisor planning platforms and their ability to streamline the goals-based process cannot be underestimated.

The rapid rise of robo-advisors is just one piece of a larger trend that is reshaping the advisory industry, driven in large part by an ongoing generational shift.

“This is a secular shift to passive management, not a cyclical one,” says Suzanne Duncan, Global Head of Research for State Street’s Center for Applied Research.

“This is a secular shift to passive management, not a cyclical one,” says Suzanne Duncan, Global Head of Research for State Street’s Center for Applied Research.

This shift, though, is fueling the emerging investor perception that basic asset management is a “commodity” service, not a source of added value worthy of the significantly higher fee
charged by traditional advisors. “Investors are more pricesensitive now because they have been burned too many times,”

The role of advisor planning platforms and their ability to streamline the goals-based process cannot be underestimated.

Morningstar Investment Management studied the topic and came up with a formula for what it calls Gamma, “the additional value that can be achieved by an individual investor [typically when guided by a financial professional] from making more intelligent financial planning decisions.”

In their study published in 20137, researchers David Blanchett and Paul Kaplan pinpointed five variables that impact portfolio performance, using retirement income as the metric:
• A total wealth framework to determine the optimal asset allocation
• A dynamic withdrawal strategy
• The role of guaranteed income products
• Tax-efficient decisions
• Liability-relative assetallocation optimizatio