"Steve Dunlap, president and COO of FolioDynamix, said that while technology will be necessary to achieve the sort of scale needed to survive under the DOL, it cannot replace a human being or give that advisor air cover for fiduciary scrutiny.
“A lot of people have said robo is the hot new thing … so they rush out and sign a deal with a robo advisor and bolt it onto the side,” Dunlap said. “If it’s not an extension of your core abilities, those customers are going to be gone.”
As more and more asset management firms buy or build their own robo platforms, either for advisors or for DIY investors, there’s also the question of the firms utilizing the automated products to sell their own products. For example, Schwab’s Intelligent Portfolios, as well as its for-advisors product, Institutional Intelligent Portfolios (IIP), automatically direct investors towards investment models using Schwab products. This could create a conflict of interest both for Schwab and for an advisor custodied with Schwab using IIP to serve clients.
Schwab declined requests for an interview. Seth Rosenbloom, the associate general counsel of Betterment which creates a competing institutional service "Betterment for Advisors", would not comment on a specific company’s business model, but he expects to see changes from those offering proprietary products." |
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