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Carol Massar far left cohost of The Bloomberg Advantage moderated a panel focused on digital advice with from left to right Personal Capital CEO Bill Harris Marstone CEO Margaret Hartigan and Brian Walter of the IBM Watson Group
<p>Carol <span data-scayt-word="Massar">Massar</span> (far left), co-host of <em>The Bloomberg Advantage</em>, moderated a panel focused on digital advice with (from left to right) Personal Capital CEO Bill Harris, <span data-scayt-word="Marstone">Marstone</span> CEO Margaret <span data-scayt-word="Hartigan">Hartigan</span> and Brian Walter of the IBM Watson Group.</p> <div> </div>

Personal Capital: Don't Call Us a 'Robo'

Bill Harris, co-founder and CEO of personal finance platform Personal Capital, doesn't characterize his firm as a robo-advisor.

But what is a “robo advisor? What's really the difference between the “digital advice” platforms, the “digital-enabled advice” solutions and those companies that embrace the “robo” moniker? Depending on the parameters, companies like Motif Investing and Alexa von Tobel’s LearnVest are included in the universe of these automated advice platforms.

“The classic definition of a robo-advisor is an automated investing tool," Harris told advisors at Pershing’s INSITE conference in Orlando. "You’re essentially creating an allocation of ETFs based on some number between one and four questions you’ve asked the participant. It’s completely automated."

In contrast, Harris says the team at Personal Capital sees themselves as delivering “virtual advice,” not robo advice. “We do have technology that is helping to automate and scale what we do, but in addition to that technology, just as important, are the individual advisors.

“Ultimately, the job of matching a household with the optimal portfolio is a more complicated thing than plugging information into a series of algorithms,” he adds. Harris noted that Personal Capital does spend a lot of time on the technology on the front-end of client conversations to assess a clients’ total assets, wherever they may be held. But Harris describes the company as an RIA with fiduciary responsibility.

“That comes with the notion of trying to help on the holistic financial planning side. You move from transactional, you move from advocating individual products to something where you’re paid by the client, not with other relationships. You can allow yourself to be completely focused on the client’s best interests.”

He says digital technology, the move from active management to passive management and the move toward a fiduciary standard are the three “big waves” that are completely changing the financial services industry today.

"Every robo I’m familiar with is similarly an RIA and has that fiduciary responsibility,” Harris says.

TAGS: Technology
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