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How Some Savvy FAs are Overtaking ‘Basic’ Robos

By Murray Coleman August 14, 2017

Robo advice for mass-affluent investors keeps evolving. But brick-and-mortar advisors aren’t standing still. In fact, some traditional FAs are taking into their own hands ways to automate more sophisticated types of holistic planning – from philanthropy to tax strategies and healthcare issues.

“We’d all like to work with 200 families if possible and create more scale in our practices,” says David Edwards, president of Heron Financial Group in New York, which manages $300 million. “But most of our legacy technology platforms are only built to let us comfortably handle maybe 80-90 clients at a time.”

He’s now exploring different online tools to help expand his account aggregation and asset allocation processes. “There are many new off-the-shelf software packages that you can integrate together to take the busywork out of the comprehensive financial planning process,” Edwards says.

For instance, Heron Financial uses a mobile app, Mobile Assistant, that helps Edwards turn client meetings into easy-to-disseminate notes in Redtail, the firm’s CRM system.

It also feeds into Edwards' efforts to automate client report generation. “Previously if I had meetings at 9:30, 11:30 and 2:30, by end of day I couldn’t remember what I had agreed to do,” he says.

Other firms are writing their own playbooks for next-generation holistic planning.

Savant Capital says it’s licensing new off-the-shelf software suites to create their own robo-like experience for clients.

The Rockford, Ill.-based indie RIA, which manages more than $5 billion, uses artificial intelligence applications tailored to wealth management. Besides prepackaged software, Savant CEO Brent Brodeski says his own tech staff is writing algorithms addressing specific integration issues.

The idea is to help bridge gaps with core financial planning suites and individual apps. “Where the magic starts is when human advisors can convert most of their complex advisory services to technology in a seamless fashion for clients,” Brodeski says.

Brent Brodeski

By year’s end, Savant expects to start beta testing its own robo-style package that automatically plucks key data from a family’s tax returns. “Its engine is built to identify different tax opportunities based on all of that information and create a report for advisors to go over with their clients,” Brodeski says.

In short, he adds, such technology is a “good way to show people some tax gaps they might’ve overlooked just due to the overwhelming amount of information that a comprehensive financial plan includes.”

Savant is also working on a similar tool to automate estate planning. It’s designed to automatically sort through internal client reporting software, CRM data and core financial planning databases to identify an appropriate estate planning strategy from 120 different scenarios, according to Brodeski.

These range from finding “actionable” ways to better use charitable trusts or living wills and flushing out more philanthropic opportunities using different types of retirement accounts.

A report is produced that advisors can “use to either double-check their own estate planning analysis" or find more tangible evidence to "show their clients how they can better align different estate planning strategies to their longer-term financial goals,” Brodeski says.

Advisor Jonathan Swanburg in Houston isn’t writing special algorithms. But his employer, Tri-Star Advisors, finds it can achieve similar results automating more areas of clients' comprehensive plans by taking advantage of new algorithms being embedded in core prepackaged financial planning suites.

Tri-Star, which also offers Betterment’s robo to investors with smaller accounts, uses as its main planning tool eMoney Advisor from Fidelity.

“The beauty of dealing with areas like tax and estate planning is that in many cases there are legal requirements which make answering specific questions a rules-based proposition,” says Swanburg, whose firm manages about $150 million.

He’s finding broad-based planning software often comes equipped to compare — sometimes even recommend — different strategies in minutes.

Creation of trusts, modeling charitable contributions and changes in estate tax situations are just a few of the planning tasks eMoney’s algorithms can help handle, Swanburg says.

“Everyone does the investment side of things now,” he says. “It’s like putting steak on the table as your main course – you need to do more than the Betterments of the world.”