Automation Changing the Client-Advisor Relationship

The following is an excerpt of an article that I published in the March/April 2017 issue of Investments and Wealth Monitor,[i] We feel strongly that the sentiment is just as relevant today as it was then.

Now that clients can see what they own, make, and pay, clearly and concisely, on their own time, they can easily find the answers on their own to common questions. Further, because they can see the actual performance of their portfolios in real time, when the inevitable market shock happens they need less hand-holding. For example, when Britain voted on Brexit, we didn’t get a single phone call about portfolio performance. We asked clients why they didn’t call, and the answer was almost universal: They could see that their portfolios were reacting the way they expected and they did not feel the need to dwell on the market volatility.


Investment management on automated platforms has become the process by which we implement our advice to clients. It is the commodity portion of what we do for clients. This is a significant break from the industry standard of selling clients on the idea that the value they are paying for is the ability of their broker or advisor to deploy the client’s money in a mutual fund portfolio. The true value, and the value that investors will pay for, however, is knowing whether they can maintain their lifestyles for the rest of their lives. By implementing financial advice through an automated platform, we provide clarity of information and transparency that allows our client’s to stop worrying about the markets and focus on what matters, their future.

Many investors are still getting information and analysis about their financial planning and investment performance through monthly reports and quarterly meetings, one can see where the pressure is being applied by automation. Our clients often tell us how much they appreciate the ability to remotely follow their accounts and the progress of their financial plans. Having complete and real-time information via an app increases client engagement with the account and increases the likelihood of success. As a result, we are talking with clients more about their life goals and how to achieve them.


All industries, ours included, are competing for a shrinking slice of our clients’ time and mindshare, so it is more important than ever that advisors be able to meet clients on their own terms.[i] Technology and entertainment companies have conditioned customers to expect that their information will be available when they want it, in a form they can easily and quickly consume on the move. This ease of access has increased the value placed on the presentation of information. The newspaper industry is a striking example. Today’s modern news consumer gets headlines from an algorithm, which chooses articles based on an individual’s prior choices. No longer does one take the time to read through a paper to locate information of interest. Let’s not presume that the dissemination of investment advice or reporting should be any different.



Advisors need to take steps to prepare their practices for the changes that are impacting the industry. They should understand clearly who they are as advisory firms and where they want to go over the next five to 10 years. The industry changes we are seeing, such as downward pressure on fees, a demand for transparency, and the expectation of on-demand service, are only going to accelerate. For some firms, this is an opportunity to transform their businesses and accelerate into the future. For others, it will lead to an understanding that the firm cannot remain viable. Those in the latter camp will be confronted with investment management’s commodification and its impact on the value of their businesses. Don’t expect there to be a multiple paid for a business that will require a wholesale change to the existing investment management and fee structure.

For too long automated investment management or automated advice, as the case may be, has been just for the small client with few investable assets. It has been viewed as a low-fee and low-value platform. But the youngest clients with the fewest assets should not be the only clients with access to the lowest fees, most efficient platform, and the best chance to meet their goals and objectives.

We are in a period of rapid and immense change. The impact of technology will only continue to accelerate the pressure on financial advisors to adapt. Today we are facing destruction of the idea that investors will continue accepting the same opaque high-fee business models of the past.

Tomorrow it may be the replacement of human advisors altogether by artificial intelligence and chatbots.[ii] Regardless, the successful firms will be able to constantly adapt to every sophisticated technological advancement. As retail legend Les Wexner once put it, “If you stop to smell the roses, you get hit by a truck.”

[i].     Eliot Brown, “Future of Tech and Media: Waging a War for People’s Time,” Wall Street Journal (October 17, 2017),

[ii].    Elliott Krause, “This Robot Will Handle Your Divorce Free of Charge,” Wall Street Journal Online (October 26, 2017),