Traditionally investors have worked directly with asset custodians or hired registered investment advisors (RIAs) to manage their funds. Recently, however, robo-advisors in the form of wealth management apps, a new class of financial advisors, have entered the industry. These apps use various pre-set equations and algorithms to automatically build an investment plan for investors’ long term goals. 

While early investors and millennials are adopting robo-advisors the quickest, they aren’t the only ones using them. Major RIAs and wealth managers are creating their own robo-advisors to benefit their businesses. In fact, BlackRock, a massive $4.7 trillion wealth management company acquired FutureAdvisor for $600 million to supplement its current market strategy. 

Due to the growing consumer trend, it’s become increasingly important to help streamline and simplify services while enabling clients to solve complex investment challenges with easy to use technology. This isn’t the only reason why major RIAs and wealth management firms are out to build robo-advisors. Here are a few important reasons why wealth managers and RIAs should add a robo-advisor to their firm’s offering.

Perfect Amount of Human Interaction 

Having properly trained support representatives creates a great image for firms but having people deal with every little customer support issue is inefficient. Allowing a robo-advisor to handle the sign up process by providing investors with easy to follow instructions, firms can effectively streamline the process, attract more investors and save money while doing it. 

The shift toward technology based solutions is clearly visible. Many major startups and existing RIA’s have already begun creating and launching their own robo-advisors that complement traditional wealth management practices. Combined, they deliver a better and simpler experience for investors. 

Scalable Business Model  

Small investors are more likely to work with custodians on their own rather than contacting an RIA firm with higher fees. Implementing a robo-advisory application can provide a platform for smaller investors to safely and cost-effectively take advantage of your firm’s wealth management services.  

One of the major reasons why millennials and small investors don’t go to an RIA is because a large majority have restrictions on minimum investable assets. Taking advantage of the automation a robo-advisor offers, your firm may be able to lower management fees and minimum investable asset requirements – encouraging younger investors to start working with your firm at an earlier stage and eventually grow to work with your traditional wealth  management team.

Streamline & Automate Tasks 

Robo-advisors are great at quickly crunching numbers and are consistently getting better at complex calculations. They are smart enough to take input from an investor and provide a risk assessment. Accurate risk assessments allow investors to get started in a considerably small amount of time without straining the firm’s human resources.  

Robo-advisors are a great choice for automatically assigning an investment portfolio to clients as well as helping them understand their account’s performance in an intuitive way. Almost every major robo-advisor offers users a dashboard that provides access to important information without having to talk to anyone – making the process highly efficient. 

Easily & Widely Accessible  

Robo-advisors can be designed as mobile apps, web apps or both – allowing users to interact with their accounts free of any human dependency. Apps like Plectrum Accelerate have proven to be exceptionally successful primarily due to their free features and easy-to-use dashboard. 

Creating a wealth management app for your firm on iOS, Android and web makes promoting traditional services to tech-savvy investors and millennials more accessible. You can use the data generated by the robo-advisory app to find the right time to suggest more comprehensive services to your existing user base.

Should You Invest in A Robo Advisor? 

The accessibility and overall benefits a robo-advisor provides can be extremely beneficial to wealth managers and RIAs. Complex investors will always need experienced wealth managers that provide personalized service but launching a robo-advisor for your firm can reduce strain on human resources. Keep in mind, robo-advisors are a great way to target smaller investors and a younger audience by offering a cost-effective alternative to your traditional services.