Noting that the growth rate of financial advisors’ business has slowed from 3% to 1% over the last three quarters, Envestnet’s CEO Jud Bergman asked the audience at his company’s Retirement Symposium this week whether robo advisors were to blame.
Predictably, the question was a setup by the leader of a firm that works closely with and believes in financial advisors. Answering his own question, Bergman responded that the slowdown was cyclical, not the impact of robo advisors. However, he issued a strong warning to advisors that do not embrace technology to improve productivity.
According to Bergman, the successful advisor of the future “will run a fully integrated technology practice. Wealth management advisors that use technology for back office, routine tasks grow twice as fast, spend 35% less time on these tasks and spend 90% more time with clients and prospects. The greatest benefactor of technology is the end user much more than the tech companies themselves.”
Envestnet made a big bet on the retirement market with the launch of the Retirement Solutions (ERS) group more than two years ago. Harnessing technology and data, ERS says it hopes to enable, not supplant, advisors — unlike the claims made by some of the firm’s robo advisor counterparts. Even Financial Engines, arguably the oldest and most successful robo advisor, recently announced that clients will be able to access live advisors. There are rumors that they are looking to partner with retirement plan advisors.
Though an IBM computer was eventually able to beat Garry Kasparov, one of the greatest chess masters in history, in 1997, Bergman noted that behind the victorious Big Blue machine was an army of programmers. Similarly, Berman warned, financial advisors who are not as proficient at their trade as Kasparov was at his will be at a distinct disadvantage to those who leverage technology.
