News, Vision & Voice for the Advisory Community


Citing Edward Jones as a cautionary tale, Cerulli alerts 'eRIAs' -- i.e. robos -- that they need to be world-beaters just to survive

The Boston-based researcher suggests by 2016 the standalone B2C model will demand net asset gathering $150 million per month -- a figure that will soon balloon to $180 million per month

Author Brooke Southall October 14, 2015 at 4:42 PM
1 Comment
no description available
Frederick Pickering: eRIAs should consider pivoting to a business-to-business model.


Stephen Winks

Stephen Winks

October 15, 2015 — 6:27 PM

Robo Advice firms are just beginning to find their place in finance. They are not an end unto themselves, but a means to offer a higher level of counsel, going beyond our human three dimensional limitation to reason. We all remember the fear that the internet would kill brick and mortar retailing? In actuality, the web simply enhanced brick and mortar brands. “Client acquisition” is very daunting and expensive in financial services, especially if you start from scratch. Yet the top executives of our largest asset management institutions (Fink at Black Rock, Dimon at JP Morgan Chase, Stumpt at Wells Fargo, Theil at Merrill, etc). see “robo advice” as a way to greatly enhance their value proposition by inexpensively affording a far higher level of client service. Larry Fink observes, “robo advice” will be as ubiquitous as ATMs”. “Robo advice” will .(1) redefine the broad range of threshold investment and administrative values addressed and managed, (2) facilitate (real time) continuous, comprehensive counsel required by statute. (3) reduce the cost of advisory services, (4) introduce a far higher level of advisor accountability and responsibility. In its essence “robo advice” simply decouples and re-prices mechanical advisory services technology from high skill portfolio construction. The packaging of sub-accounting, trade and order routing and reporting; tax lot accounting; portfolio (performance, tax, cost) optimization/rebalancing, proposal generators, CRM, data warehouse, etc. etc. into a prudent (fiduciary) process will transform the industry as the industry is presently not structured acknowledge or support brokers rendering individualized (fiduciary) advice. The key to “robo advice” is (1) expert authenticated (back to statute) prudent process and (2) a more modern approach to portfolio construction in the client’s best interests which transcend outdated product distribution in the b/ds best interest.

“Robo advice” is not an impactful model unless it is used as a vehicle to assimilate innovation into an existing asset management enterprise which seeks market share in the consumer’s best interest and professional standing of its constituent clients. “Robo advisors” which ignore prudent (fiduciary) process and a more modern approach to portfolio construction will prove to be of no consequence as professional standing can not be achieved

Stephen Winks

Related Moves

December 31, 2020 at 4:37 AM

Oisín's Bits: Wealthfront drops old mission statement, declares war on institutions and emphasizes banking future • Seeking Utah charter, Edward Jones may become largest bank in US by branch count • After Advent chief leaves, Black Diamond head steps up

Andy Rachleff cans the old 'democratizing' mission statement at his robo; The 14,200 one-man Ed Jones branches may become branch banks; Steve Leivent consolidates power at SS&C.

July 3, 2020 at 1:12 AM

Mentioned in this article:

Financial Planning Software
Top Executive: Rich Cancro

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo

White Paper Postings

Common Tags

Recent Articles

Popular Writers

RIABiz logo


About Us




RIABiz, Mill Valley, California
Copyright © 2009-2024 RIABiz Inc. All rights reserved.