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By Mitchell H Caplan

Change is coming rapidly for robo advisors.

Offering a simple, automated investment platform at rock-bottom fees, robo advisors have caused a massive stir in the wealth management industry in recent years. Growth has accelerated, as robo advisors sign up new consumers and gather more assets. At the same time, there has been a fascination around the future of robos in the advisory channel. Would robo advisors challenge the traditional human advisor—or would these digital advisory platforms be an ally for creating greater value?

The 2015 Advisor Authority Study, conducted by Jefferson National and Harris Poll, found that advisors who managed the most assets and who earned the most personal income are the most tech-obsessed. They are far more likely to leverage robos, spend more on technology overall, and adopt technology into their practice at twice the rate of the typical advisor. For these advisors using technology is key to enhance the client experience on the front end, and create a more efficient and scalable practice on the back end.

Now, as more advisors are going robo, at the same time that more robo advisors are turning their attention from consumers to the advisory channel, we have seen a corresponding trend in the robo space: consolidation and acquisition.


Over the past year, the top three independent robo advisors by AUM — Betterment, Wealthfront and Personal Capital — more than doubled their combined assets from roughly $3.8 billion at the end of 2014, to roughly $7.9 billion at the end of 2015. An impressive growth rate for a business model predicated on building a broad base of clients with relatively low balance accounts. Interestingly, the 2015 Advisor Authority Study found that advisors who use robo-advice are employing the tools for older, wealthier clients — contrary to popular belief.

As any industry matures, consolidation is inevitable. For financial services broadly, and for robos in particular, there are a various forces at work.

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