Every day there seems to be news about another asset manager announcing that it is launching a robo-advisor service. From disruptive startups like Betterment and Wealthfront to traditional asset managers such as Fidelity and Vanguard, everyone seems to be “going robo” and offering online portfolio management services that use low-cost ETFs and algorithms that make asset-allocation decisions.
While it remains to be seen just how disruptive the robo movement will be to the traditional human-based wealth management business model, there is no doubt that the proliferation of these low-cost online platforms is putting downward pressure on margins across the industry. (The new fiduciary standard for retirement advice certainly isn’t helping things either.)
But does the rise of robo advisors mean that traditional financial advisors will be forced to compete against these machines based primarily on price? I don’t think so. And I think that using newsletters, white papers, blogs, videos, and other forms of content marketing can play a vital role in helping advisors protect their margins from the robo invasion.
The Limits of Automation
The reason I think that high-quality financial advisors will continue to thrive in a post-robo world is that asset-allocation decisions and trade execution are just a small part of the value proposition that financial advisors bring to client relationships. Many of the most valuable things advisors do for their clients are things that simply can’t be automated.
A formulaic on-boarding questionnaire might be able to gather information about how clients describe their risk tolerance in the abstract, but the only way to know how a client is feeling in the midst of a market correction is to meet with that client and hear his or her voice. Clients might be able to list their top five financial goals in an online form, but only a trusted advisor can help clients think through how those goals should be reprioritized as the client’s family or work situation changes.
Clients are willing to pay a premium for a relationship with a high-quality advisor because clients inherently understand that trust and real-life experience are not commodities. This reality is good news for financial advisors, but it also means that there is more pressure on them than ever to showcase the ways they add value to the relationship.
Your Most Powerful Tool to Protect Against Robos = Your Voice
One of the best ways that financial advisors can show the value of working with a human is through their marketing materials. It’s important to showcase the things about your practice that can’t be automated. Your clients want to hear from you, and they want to know your thoughts on what recent market developments mean for their portfolios and goals. They want to know that you aren’t just putting them in a demographic bucket and applying one-size-fits-all decisions to their portfolios.
Here are a few suggestions for how financial advisors can use various content marketing tools to showcase their voice, their expertise, and their humanity:
- Videos: Clients want to work with advisors who they trust and like, and video can be a great way to position yourself as someone who clients want to work with. In terms of adding new clients, having a short video on your website or in your email signature gives prospects a chance to get to know you even before that first in-person meeting. Videos can also help in terms of client retention. Your clients always want to hear from you, but never is this more important than during periods of market turbulence. In addition to sending your usual written quarterly market recap, you may want to consider recording a short video message whenever there is a major market event. This can be an effective way to reassure clients and show that you are on top of the issue.
- Newsletters: A good newsletter does more than just provide a market update or share some financial planning advice. Your newsletter should also help clients get to know what makes your firm unique. One way to do this is to write a client profile in each issue of your newsletter. A well-crafted story about one of your clients gives you a chance to showcase the value that you deliver and emphasize how important these relationships are to you. Also, client profiles can be great cross-selling tools. By being strategic about which clients you profile, you can show the range of services you provide beyond just basic portfolio management or retirement planning.
- White papers and blogs: Robos can do a good job of making asset-allocation decisions, but they aren’t designed to give advice about the wide range of financial planning issues that are so important to clients. Clients count on their advisor for expert advice on things like 529 college savings plans, Roth vs. traditional IRAs, and navigating the oft-changing laws related to capital gains taxes and estate taxes. One of the best ways to show your expertise in these areas is to publish white papers or blog articles that help clients understand how these issues affect them.
Robo advisors and other forms of automated wealth management services are here to stay. But that doesn’t mean that the services provided by traditional advisors have suddenly become less valuable. By writing or creating high-quality newsletters, white papers, blogs, videos, and other forms of content marketing, financial advisors can showcase the aspects of their businesses that can never be automated.
About the Author
Scott Wentworth is the founder and head writer of Wentworth Financial Communications. He helps firms throughout the financial services industry create investment-grade white papers, blogs, newsletters, and other forms of thought leadership. Based on the fact that the voice recognition software on his smartphone once confused “directions to son’s daycare academy” with “directions to Song’s Kung Fu Academy,” Scott isn’t worried that writers will be replaced by robots any time soon.