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Create Account to manage your assets on the Jefferson National Account Management website.

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Advisors
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April 18, 2016

Financial Planning: Robo Consolidation Creates Advisor Value

 

Industry expert and Jefferson National’s CEO, Mitch Caplan, contributed an article entitled, “Robo Consolidation Creates Advisor Value,” in Financial Planning’s RE: Invent Wealth Section. According to Mr. Caplan, change is coming rapidly for robo advisors.

While robos have seen steady growth in recent years, as any industry matures, consolidation is inevitable. There are a several forces at work:

  • Insatiable Demand for Innovation: Few startups have the capital required to continuously meet this demand. Most robos must turn to a partner with deep pockets to stay ahead.
  • Acquisition is Pervasive: It’s inevitable that many will be purchased — or perish.
  • The DOL Fiduciary Ruling: to be complaint, especially for serving smaller clients, some of the largest RIAs, wealth managers, BDs and wirehouses are considering robo advisors as attractive targets.

Now, two trends are also converging in the acquisition and consolidation of digital wealth platforms. A recent webinar by Aite Group — 10 Trends in Wealth Management, 2016: From Digital Advice to Regulation — examined the importance of both trends.

  1. Incumbents Turned Disruptors: Traditional firms see the benefits and are adopting robo at a faster pace–licensing their services, building their own, or buying them outright.
  2. Robos Shifting to Advisor Market: Many robo advisors see that the future lies in playing nice with the human advisor.

Mr. Caplan concludes, noting that technology is no replacement for holistic guided financial advice. But as consolidation and acquisition leads to the adoption of robo by a growing number of advisors and their clients—creating a better user experience on the front end and creating scale on the back end—the beneficiary will be the advisor and the consumer.

 

Advisors may find that bridging the robo divide helps them become more connected than ever before. Read more, here