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What I Learned About Robo-Advisors From My Family Reunion

Automation, Research & Insights 1 Comment

by Craig Faulkner, CEO of FMG Suite

My wife comes from a large family. I’m talking really large: eight siblings, 36 grandchildren and around 60 great-grandchildren! Over the 4th of July weekend we all gathered for a fun, noisy family reunion.

Meanwhile, I’ve had this issue of Robo-Advisors on my mind. Since we are in the business of creating marketing materials for financial advisors, their concerns are our concerns, and they are understandably worried about the impact this new trend will have on their clientele. Will investors abandon advisors and trust a Robo-Advisor service instead?

I’ve been in the industry long enough to have lived through a few sea changes. I remember in 1975 when Charles Schwab came on the scene with discount brokerage services, and pundits moaned that the financial planning industry would collapse. Instead, the industry thrived, and Charles Schwab joined the party! Now Schwab is the largest sponsor of Registered Investment Advisors, with over 5,000 firms under its banner. Several shifts like this have convinced me that anything that helps people invest responsibly is a boon to a good financial advisor, if approached properly.

One Investor At a Time

With that in mind, I found myself looking at our family gathering from a marketing perspective, and assessing each participant as a possible candidate for financial planning. Let me choose just four family members and briefly talk about how a Robo-Advisor can be used as an effective marketing tool with each. (By the way, these are real people. Only the names have been changed so I don’t get disowned!)

  1. Brittany (24) just graduated from college and landed a great job with a tech giant. She received a signing bonus and has a great salary, yet is still living fairly simply in an apartment with roommates because she enjoys the social scene. Take Brittany and her parents to lunch to celebrate her achievement and challenge her to save 10% of her income. As a millennial she will be interested in technology, so go ahead and encourage her to use a Robo-Advisor (that you recommend and oversee)to invest some of the money. Then recommend one or two other investment vehicles just to start building a portfolio. By helping this young woman get started, you are building a relationship and scoring points with her parents, as well as teaching valuable investment habits to a person with a great earning potential.
  2. John (40) is a father of four girls. He owns a boutique mechanic business that creates turbo engines for race cars, and other specialty items. John is a self-made man with a great skill set but not much investment experience, so a Robo-Advisor platform may seem like an easy answer. Meet with John and his wife and, if they desire, incorporate that option as a way to get them into the habit of investing some money each month. Schedule a yearly review and begin to add other investments to round out a portfolio that will provide for the education of those four girls and a secure retirement.
  3. Eric (55) has a number of franchise businesses and his wife Lorraine is the manager of a high-end furniture store. With their combined incomes and investments they are secure, but a large family with various needs is a constant drain on resources, and they are worried about building the cash reserves they will need to retire in the next few years. They have been looking at a Robo-Advisor platform, simply because their busy schedules make it hard to set aside time to think about future planning. Schedule a meeting with Eric and Lorraine to talk about ways to prepare for the future without too much extra stress today. They may quickly see that you can provide all of the care they require.
  4. Catherine and Carl (62) are the most affluent members of the group. With an income in the eight figures, extensive real estate holdings, and a large investment portfolio, they represent a significant addition to your business. Yet even this couple is intrigued by Robo-Advisors and their low fees and automated tax loss harvesting. Offer to give them an overview of the different offerings and answer their questions. It will give you an opportunity to review their situation, and at the same time you can help them see how important it is to have an overall plan and a real, caring person overseeing their portfolio.

The Elephant in the Room

Now, what is the elephant here in the banquet room that no one is talking about? It is this: as members of this family, all of these people will inherit some money in the not-too-distant future. Whether young or old, they will come into a windfall that will represent a significant investment opportunity. The same is true of many of your clients, and as you strengthen your relationship with each member of the extended family you build a foundation for that future event.

Rather than taking business away from you, an innovation like a Robo-Advisors can be utilized as a marketing opportunity. Choose one that you feel comfortable with and use it to initiate conversations with millennial clients, as well as help them establish investment patterns that will benefit them and build relationships for future, more significant events. Rather than panicking, have faith in the value of your services! This new innovation is just another tool in your toolbox. No robot will ever replace a human advisory relationship built on honesty, trust and sound investment principles. With that firm foundation in place, new technology can only add to your effectiveness.

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  • Kirk Faulkner

    July 20, 2015 at 9:10 am - Reply

    I thought the elephant in the room was how under cooked the chicken was 😉

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