Lately, we talked about the strengths and weaknesses of robo-advice for wealth managers. This week, we’re examining how traditional wealth management firms can successfully incorporate robo-advice capabilities into their businesses.

To date, we’ve seen firms take a variety of approaches when it comes to robo-advice. Some firms are building their own services, others might be taking advantage of “white-label” services from established providers and some firms might even buy up independent robo-advisory firms—what we have seen already happening. What’s clear is that robo-advice is poised to have a significant impact on the wealth management industry.

Five factors to consider

Financial advisors will remain—in my view—central to wealth management, but robo-advice brings new capabilities that firms will need to adopt and integrate. When evaluating robo-advice options, firms should focus on these five questions.

  • Solution: Will you develop in-house robo-advice capabilities, partner with an expert or acquire another market player?
  • Positioning: Will your robo-advice be a standalone service, part of a full-service financial advisory package, or a hybrid of the two?
  • Analytics: Are you able to segment your market and identify your robo-advice audience?
  • Service: How can you deliver an intuitive and satisfying robo-advice experience for your clients?
  • Rollout: What steps do you need to take to ensure strong uptake and smooth implementation?

Three keys to success

What makes sense for a specific wealth management firm will depend on a host of factors, including size, market positioning, respective clients and their needs. Regardless of the robo-advice solution any firm is choosing, the success of the offering will highly depend on:

Read the report.
Read the report.
  • Getting the offering right. Once you’ve picked your target audience—whether that’s price-conscious investors or millennials who are just getting started—you want to make sure your pricing and services make sense for them.
  • Developing an effective distribution strategy. If you are targeting a new audience with your robo-advice capabilities, for example, weigh the pros and cons of launching these new services under your established brand versus a new brand name.
  • Getting the advisor force on board. If your traditional advisory services and robo-advice services are working together, you should make sure the experience is seamless from the client’s perspective and efficient from yours.

Robo-advice is here to stay. The real question is: can you make it work for your firm?

For more on robo-advice, check out this report:

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