InVest Conference Day 1: The Case For Digital-Hybrid Advisors

InVest Conference Day 1: The Case For Digital-Hybrid Advisors

Any advisor attending a financial services technology conference this year has likely walked away with the same message: You need to embrace new technology. The In|Vest 2015 conference, held this week in New York, was no different.

Sebastian Dovey, co-founder of Scorpio Partnership, a market research and consultancy firm for the wealth management industry, kicked things off with a discussion on branding in the digital world.

“Forty percent of high-net-worth money is in the industry today,” Dovey said. “Of that 40 percent, 78 percent or 79 percent is with 20 of the most visible brands.”   

Dovey stressed the importance of integrating technology seamlessly into clients’ lives. One example he gave was using facial recognition technology to get hidden information about how clients feel about money to improve risk analysis. 

Betterment CEO Jon Stein joined David Canter, the executive vice president of practice management and consulting at Fidelity Institutional Wealth Services, to discuss the partnership the two companies announced in October. Stein said Betterment now has more than 94,000 funded accounts, $2.3 billion in assets under management, and is adding accounts at a rate of about 1,000 per week. When asked about the strategy used to attract clients, Stein said there is no “magic bullet.”

“It’s like every chef has their own recipe for the best tomato sauce,” Stein said. “I can’t say that the way we come up with our recommended portfolios [is best]. If you get 10 professors in a room, all 10 would have slightly different tweaks they would make to it.  They would all be equally right and they would all be equally wrong.

“But I think the way the industry is moving is towards more goal based planning, and that’s where we’re trying to move the industry.”

Stein and Cantor disagreed about the impact robo advisors are having on fees, but the two did agree that advisors need to expand their value proposition to offer holistic financial planning digitally if they want to remain competitive. Stein also said Betterment still doesn’t have plans to go public, but said it wasn’t out of the question.

“Our aspiration has always been to help millions of people enjoy a better life. We’re a long way from a million, but well on that path.”

When Motif Investing’s Co-founder and CEO Hardeep Walia took the stage, he immediately stated how sick he is of the “robo advisor” label and said many are “just a cute UI,” or user interface.

“I’m robo-ed out,” Walia said, adding that his goal with Motif and its new partnership with Pacific Life Insurance was always to partner with advisors. In March, Motif teamed up with Pacific Life to launch Swell Investing LLC, a no-fee investment firm created around the ideas of “cause-driven” investing.

As for Motif, Walia said his company is working on new tax-harvesting services, automatic hedging strategies to defend portfolios against market downturns, and an expansion into international markets. Motif now has 160,000 investors, but Walia wouldn’t disclose AUM for fear of “poking the giant” firms.

Bo Lu, the CEO of FutureAdvisor, argued that digital advice clients want the same things as traditional clients, and took advisors through a deep dive of each individual action his team had to code. Lu said the company is planning to roll out a business-to-business version of the software soon.

TAGS: Technology
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