The growing hoard of wealth invested with robo-advisor platforms is forcing advisers to change how they operate. By the end of 2017, $160 billion of assets will be invested in digital advice platforms, up from $65 billion a year ago, according to research by Aite Group and Broadridge. That number will swell to $400 billion by the end of 2018. Competition from these low-priced services and the trend of replacing mutual funds with lower-priced ETFs, is compressing fees to such an extent that advisers will need to add more clients in order to generate the same fees.
Using data will help advisers get there. Just as Amazon can harness data to predict what you will shop for and data helps Netflix predict which TV series you’ll want to watch, advisers today can leverage a huge reservoir of data to reveal everything from what’s going on in a client’s personal and professional life to how they want to communicate about their money decisions.