When Raymond James revealed the firm's custom-built "robo advisor" on Monday, executives were adamant that they have no plans for a retail-facing model that may compete with its advisors out in the field.
Instead, they have built an advisor-centric stand-alone product with an automated investment platform that will combine with new proprietary data-driven analytic tools; and deliver "insights" to the advisor about both their practice and their clients needs. Dubbed the "Connected Advisor," Raymond James will roll out the new offering over the next several months. Like other firms which have embraced automated investing software, Raymond James sees it as a way to help advisors become more efficient and connect with next-generation clients.
The real value with the Raymond James' product, according to executive vice president of technology and operations Bella Allaire, is the insights that advisors can glean from the data the platform tracks—insights that can help an advisor better anticipate the needs of clients and help show the advisor how they could focus their efforts to run a more efficient practice.
“There is a lot more sophistication with data mining; more insights to the client based on data, analytics and algorithms that we’re putting into the platform,” said Allaire, who has long extolled the value of big data in wealth management. She added that robo advice isn’t just for millennials or the mass affluent, but for all clients. “It’s a tool a financial advisor can use with any client they choose. The more analytics, [the more data mining provided] for the financial advisor, the better they can serve high net worth clients.”
Like others robos, Raymond James’s will put clients into one of five investment models based on their risk tolerance. The plan over time is to give advisors the ability to tweak the investment models or add their own.
Connected Advisor also brings Raymond James’s existing technology stack—including aggregation, financial planning, electronic signatures and client portals—into the same platform, so advisors and clients will share the same user experience. The company believes a combination of its technology with its wealth of information and research creates a data platform more sophisticated than most available.
“Everything we do is around the advisor-client relationship,” Vin Campagnoli, the chief information officer at Raymond James, said, calling Connected Advisor the “logical progression” of the technology the firm already offers. “It started with collaborative tools. This was the next step.”
Allaire added that the company plans to test the program in the third quarter of 2017 before bringing it to the general market by the end of the year. While the market is increasingly filled with digital advice offerings, Allaire doesn’t believe Raymond James is behind. Their product doesn’t compete with services already on the market, she said, and she doesn’t believe in “chasing technology for the sake of technology.”
Instead, Raymond James will proceed “thoughtfully and deliberately." This is also why Raymond James developed its robo internally instead of partnering with technology vendors.
“Data accuracy is critical, and seamless navigation. I would say those are two main reasons why I would not go out and buy a stand-alone platform and try to integrate it into ours.” Allaire said. “Third I believe we can make a differentiation with analytics. The power of this is not the front end of the robo platform.”