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Overview


The concept of “robo-advice”—the use of automation and digital techniques to build and manage portfolios—is attracting attention. Not only does it present an opportunity for wealth management firms to tap into underserved markets and increase advisor productivity, but it also opens up the industry to new competition.

In this Accenture report, we examine the strengths and limitations of robo-advice today, explore various options for leveraging robo-advice capabilities and explain how wealth management firms can successfully integrate robo-advice into their business models.

Robo advice

Business model impacts

As competition intensifies and technology advances, robo-advice is expected to significantly impact the wealth management business model. Investors who have access to low-cost, reasonably effective alternatives to traditional wealth management services will no longer be willing to pay premium prices without real differentiation or value.

That being said, financial advisors will still have an important role to play. Personal connections remain essential for many investors and certain aspects of the client-advisor relationship—including reassuring clients through difficult markets, persuading clients to take action and synthesizing solution options—require a human touch.

Keys to success

Accenture believes that robo-advice will complement, rather than displace, financial advisors. Depending on their size and positioning, firms may choose to build their own offerings, buy an independent robo-advisory firm, or offer “white label” services or a branded industry solution. Success will depend on:

Getting the offering right.
That includes deciding what kind of experience your firm wants to offer investors, how to price robo-advice services, and whether to position robo-advice as a stepping-stone product or a standalone service.

Developing an effective distribution strategy.
Part of the appeal of robo-advice services is their potential to attract millennial clients who have fewer assets to manage. Firms must decide whether to roll out this new offering under their established name or introduce a new brand.

Getting the advisor force on board.
Firms with advisor forces in place must determine how traditional advisory services and robo-advice services will work together. Used effectively, robo-advice capabilities can free human advisors to focus their efforts on larger opportunities.

Next steps

Wealth management firms should ask themselves five key questions when evaluating their robo-advice options:

1

Does it make sense to develop the necessary technology and solutions in-house, leverage a partnership or acquire an existing provider?

2

Should robo-advice be positioned as a standalone offering, part of a full-service financial advisory package, or a hybrid of the two?

3

Do we have the necessary analytics and market segmentation in place to identify robo-advice customers, and obtain the information and insights required to work with them effectively?

4

What steps do we need to take—including prototypes, client labs, and rapid revisions and enhancements—to deliver an intuitive and satisfying customer experience?

5

How can a robo-advice offering be rolled out through internal and external marketing initiatives, and what types of change management programs will we need for our sales force?


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