Our financial practice can never be replicated
by a robo-advisor.
Have you ever said or thought this about robo-advisors or any other technological advance?
Consider the following predictions about the radio and phonograph by Thomas Edison, inventor of the light bulb, the movie camera and the phonograph. He’s probably most famous for describing his quest to create the light bulb:
I have not failed. I’ve just found 10,000 ways that won’t work.
But consider these Edisonian crystal ball quotes:
“The phonograph has no commercial value at all.” -Edison, 1880s
“It is apparent to me that the possibilities of the aeroplane, which two or three years ago were thought to hold the solution to the (flying machine) problem, have been exhausted, and that we must turn elsewhere.” -Edison, 1895
“The radio craze will die out in time.” -Edison, 1922 (1)
Robo-advisors—sophisticated online algorithm-driven resources for the DIY investors—are slowly growing in popularity for those who are unable to meet advisor firm minimums of investment. Watch out—these robo-advisors are working their way upmarket:
But, advisors dealing with low-tier millionaires may come under pressure over time as the robos march upmarket.(2)
Should the average financial practitioner be concerned?
The answer is “it depends.” Here are a few questions to consider:
- Have you clearly differentiated your value proposition in the minds of your clients?
- Do you have a clearly “defensible” target market?
- Do you have a well-defined complementary strategic partner team to serve your clients?
- Do you have a clear and actionable plan for growing your client base or virtual team in 2015?
If you can answer yes to all four questions, you have nothing to fear and your prediction will likely hold true.
Russ Alan Prince echoes my sentiments on the importance of forming interdisciplinary teams:
What’s more, individuals and families with significant and complicated assets can benefit from the bespoke services of a cross-disciplinary team of experts who can ensure that things as diverse as business interests, tax and risk mitigation strategies, cross-border issues, estate planning and philanthropic goals are all coordinated as part of their overarching investment approach, financial goals and personal priorities…
Explains Grove, “Until solutions are developed that can intelligently address the unique challenges facing millionaires and billionaires, it’s unclear whether the high-end investor is a legitimate target market for these digital platforms.”
Let’s all be more like the Edison who found the 10,000 ways that failed rather than the Edisonian prognosticator of the demise of the radio, aeroplane and the phonograph.
As you build plans for 2015, be sure to ask yourself
- Do I have firm answers to these questions:
- Have we clearly differentiated our value proposition in the minds of our clients?
- Do we have a clearly “defensible” target market?
- Do we have a well-defined complementary strategic partner team to serve our clients?
- Do we have a clear and actionable plan for growing our client base or virtual team in 2015?
- If it makes sense to do so, what are our plans to grow upmarket or build our extended advisory team?
Save the Date: To hear about making the most of your own “upmarket” opportunities, tune in to my upcoming webinar,
Dec. 17, 2014, at 11:30 a.m. MST. Click HERE to register.