Skip to content

WHAT CAN SEISMIC DO FOR YOUR BUSINESS? FIND OUT.CALCULATE YOUR ROI

  • Sign in toSeismic loginSeismic
  • Sign in toLessonly & Seismic login
  • Sign in toLiveSocial login

CHOOSE YOUR LANGUAGE

  • English
    • Enablement Cloud

      Meet the unified solution that’s igniting revenue growth for customer-facing teams.

      Learn More
    • PRODUCTS

      • Sales Content Management
      • Learning & Coaching
      • Buyer Engagement
      • Content Automation
      • Strategy & Planning
      • Enablement Intelligence
    • PLATFORM & SERVICES

      • Platform Overview
      • Professional Services
      • Partners
      • Integrations
    • Calculate Your ROI

      Does Seismic make sense for your business? Find out with our ROI Calculator.

      Calculate Now
    • USE CASES

      • Sales Enablement Teams
      • Sales Teams
      • Marketing Teams
      • Customer Service Teams
    • INDUSTRIES

      • All Industries
      • Financial Services
      • Healthcare & Life Sciences
      • Technology
    • BUSINESSES

      • Enterprise Businesses
      • Growing Businesses
      • Why Choose Seismic?
    • Read Their Stories

      Read how global customers from all different industries thrive with Seismic.

      Read Their Stories
    • CUSTOMER STORIES

      • Genesys
      • Deluxe
    • FOR OUR CUSTOMERS

      • Magnitude Customer Hub
      • Seismic University
      • Seismic Community
    • About Us

      Discover who we are, what we value, and how we work at Seismic.

      Learn More
    • ABOUT SEISMIC

      • Careers
      • Leadership
      • Diversity & Inclusion
      • Aftershock Store
      • Contact Us
    • NEWS

      • Newsroom
      • Analyst & 3rd Party Reports
      • Shift
    • What is Sales Enablement?

      New to sales enablement? No problem. Learn what it is and why it matters here.

      Learn More
    • WHAT'S NEW

      • Blog
      • Events & Webinars
      • Product Innovation Center
    • COLLECTION HUBS

      • Resources Center
      • Enablement Explainers
      • AI-Guided Selling
      • Financial Services
      • Sales Acceleration
      • FAQs and Glossary
  • Get a Demo
TRENDS & INSIGHTS

Advisors Should Differentiate on Value to Avoid Robo Disruption

By Seismic January 21, 2016 3 min read

Hand with marker is drawing Value and price balance scale on the transparent white board.

Anyone who keeps tabs on financial services trends knows that one of the hottest topics in the industry of late is robo-advisors. Indeed, it has been hard to miss all the dire stories about how these automated advice platforms will massively disrupt the traditional wealth management business.

The conventional wisdom was that by using technology instead of people to do asset allocation at much lower price points, robo-advisors would win over tech-savvy millennials, tech-friendly Gen Xers, and other do-it-yourself investors.

With this downward pressure on pricing, if traditional advisors didn’t cut their fees (usually 1% of AUM per year), commentators opined that they’d be like small travel agencies going up against Expedia or Travelocity. This didn’t paint a pretty picture for firms.

But here’s the thing. The much-discussed disruption hasn’t yet materialized. Over the past year, we’ve seen no evidence—no stories in trade publications or analyst reports—about traditional advisors cutting their fees or having difficulty competing.

What’s going on here?  Why aren’t we seeing the “Uber-ization” of wealth management?

One reason is that instead of automated advice being a competitive threat, more traditional advisors are in position to incorporate some form of robo functionality in their practices. In some cases, large firms like Charles Schwab and Vanguard Group have come out with their own robos. More recently, as reported in the Wall Street Journal, Fidelity is testing a new automated, online investment advice platform. On other cases, firms have gone the acquisition route. Examples includes BlackRock’s purchase of FutureAdvisor, and more recently, Invesco buying Jemstep.

Fast-forward a year or two, when many more traditional advisors have robo functions in their toolkits, how will advisors differentiate and compete—and justify their 1% fees?

It seems clear that with the growing complexities and challenges of investing and pursuing other financial goals, clients are going to want broader and more in-depth financial services, especially as they build significant wealth. In other words, clients are going to be looking for more of a financial planner than an advisor.

To develop competitive advantages and differentiate their services, a sound strategy for advisors is to chart a path toward a financial planning practice. That will involve branching out to cover areas including retirement planning, education funding, and insurance. It also likely means partnering with or bringing on a CPA to handle clients’ tax and estate planning needs.

To make these changes, wealth managers, RIAs and individual advisors will need to invest in additional staff, as well as education and certification programs, all of which will need to be managed closely.

While making these changes may be difficult and expensive, it’s a good way for wealth advisory firms and individual practitioners to ensure that they’ll be able to justify their 1% of AUM fees with clients in the future.

When there’s a competing service that’s readily available and offered at a quarter of the price of your offering, you’ve got to make changes and ramp up your value delivery to hold your ground on price.

If financial advisors don’t want to expand into the financial planning arena, they’re going to have to figure out another way to continue to command their 1% fees. If they don’t, over time their investors will leave, and their practices will shrink and likely fail.

Share

Share on LinkedIn Tweet Me Share on Facebook Share via email

    About the authors

    Seismic

    Seismic

    Read More by Seismic

    SUBSCRIPTION

    Subscribe to our newsletter

    Thank you for subscribing

    EBOOK

    The Seismic Enablement Cloud™: Know More, Engage More, Grow More

    Read the eBook

    EXPLAINER

    What is AI-guided selling?

    Read more

    EVENTS & WEBINARS

    Let's meet up!

    Join us!

    CUSTOMER STORY

    Real customers. Real growth!

    Read more

    SEISMIC ROI CALCULATOR

    Grow like the sky's the limit.

    Calculate your ROI
    Scroll Down

    If you made it this far, we must be striking a chord.

    Get a Demo
    Seismic
    • Product
    • Seismic Enablement Cloud™
    • Sales Content Management
    • Learning & Coaching
    • Buyer Engagement
    • Content Automation
    • Strategy & Planning
    • Enablement Intelligence
    • Solutions
    • Sales Enablement Teams
    • Sales Teams
    • Marketing Teams
    • Customer Service Teams
    • Why Seismic
    • Resources
    • Blog
    • Resources Center
    • Trending Topics
    • What is Sales Enablement?
    • What is AI-guided Selling?
    • What is Social Selling?
    • Social Selling Hub
    • Integrations
    • All Integrations
    • Microsoft
    • Google
    • Salesforce
    • Company
    • Contact Us
    • Careers
    • Trust Center
    ISO 27001 Certified by Schellman
    • © 2023 Seismic
    • Terms of Use
    • Privacy Policy
    • Follow us on Linkedin
    • Follow us on Instagram
    • Follow us on Twitter
    • Follow us on YouTube
    • Follow us on Facebook