Advisors disagree with firm management

Advisors disagree with firm management

Advisors disagree with firm management With the greatest transfer of wealth ready to take place as boomers continue to age, advisors are reluctant to take up what is arguably the greatest thing since sliced bread.

“We are building out our own view of what we learned from the robo-advisors and so there's a fair bit of investment going into that right now,” said TD Ameritrade CEO, Fred Tomczyk, addressing the advisor demand for robo-advisors in a conference call last week. “There has been interest initially, but I can tell you at this point the take-up is pretty light.”

The disclosure came last week on a conference call to discuss flat earnings for the operation, with Tomczyk addressing lackluster advisor buy-in for the company’s robo-advisor support program.

The company isn’t necessarily alone with others foreshadowing the kind of opposition Canadian firms are likely to grapple with as they move to encourage seasoned advisors to open up their books and disgorge the kind of small client files best suited to the robo model.

“For the most part, advisors tend to be really passionate about doing the investment management themselves,” David Lyon, CEO of Main Street Financial, a U.S. company that sells practice management software, told Mason Braswell of the Investment News. The use of robo-advisors is “really injecting a new service model into their core business.”

Despite the hesitation by advisors, there’s no arguing the fact robo-advisors are slowly becoming a bigger part of the wealth management equation and while the Canadian experience trails what’s happening in the U.S., recent news that Power Financial is investing in Toronto robo-advisor Wealthsimple suggests advisors here are entertaining the same sort of questions.

“Advisors have historically been slower to adopt many technologies,” says TD Ameritrade’s Jon Patullo, managing director of technology product management with the company. “It's light now, but as we see more and more of these millennial investors coming to market, you'll start to see a shift in that trend.”

This year those over 65 in Ontario will outnumber children aged 0-14 for the first time in the province’s history. As boomer’s (those born between 1952 and 1965) age their wealth will transfer to their millennial children who increasingly are looking to robo-advisors for their wealth management needs. 

The future could see robo-advisors become the tool of choice for full-service advisors when it comes to clients with fewer investable assets. With the possibility of losing these clients many advisors could come around to the lesser of two evils.

But for now the uptake appears to be a trickle, not a flood.