robo advice: revenge of the incumbents (myvest and aite invest session)
TRANSCRIPT
Presented at:
July 12, 2017
ROBO-ADVICE:REVENGE OF THE
INCUMBENTS
Aite (pronounced “eye-tay”) Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry.
A fintech pioneer headquartered in the heart of San Francisco, MyVest combines best practices in wealth management with best-in-class technology. Our cloud-based platform enables holistic, client-centric wealth management across the enterprise in a single, unified system.
Alois PirkerResearch Director,Wealth Management
Anton HonikmanCEO
© 2017 MyVest Corporation. All Rights Reserved.
Type Definition % of Population
Wirehouse Merrill Lynch, UBS, Wells Fargo Advisors, Morgan Stanley 8%
Independent RIAMostly small firms but also have RIA groups working within larger broker-dealer firms
16%
FA with otherself-clearing firm
Large / regional players: e.g., Ameriprise, Edward Jones, Raymond James, LPL, RBC
13%
FA with online broker
Schwab, Fidelity, TD Ameritrade on the retail side (fewer than 2,000 advisors) 10%
FA with insurance BD
e.g. AXA, Northwestern (fewer than 10K advisors, some with more than 5K) 15%
FA with independent BD
e.g. Commonwealth Financial, ING (fewer than 5,000 advisors) 14%
FA with bank BD e.g. PNC, M&T Bank (fewer than 1,000 advisors) 8%
FA with private bank / bank trust
e.g. Northern Trust, US Trust, Bessemer Trust 16%
2 Annual Survey of 400 Advisors1 Qualitative Interviews
In-depth interviews with a variety of industry participants:
• Executives at financial institutions
• Financial advisors
• Executives at fintech firms
• Start-up firms and disruptors
“We take a topic and look at it from both sides, and that gives us a sense of what's happening in the market.”
- Alois Pirker, Aite Group
Aite Group Methodology
© 2017 MyVest Corporation. All Rights Reserved.
Traditional wealth
management is under
pressure
Profitability
Competition
Demographic shifts
Regulatory uncertainty
Legacy technology & business model
1996 Today
Ove
rall
Adop
tion
B2B for Enterprise 1.0
Quick WinsSimplicity, UX
B2B for Enterprise 2.0
Hybrid Human+Tech Multi-Segment
+
+
PioneersEarly Niches
B2C 1.0Retail Disrupters
B2B for Independent
AdvisorsDisrupt RIA Vendors
B2C Pivots to B2B
B2C 2.0Retail Response
Evolution: From robo-advice to digital wealth
© 2017 MyVest Corporation. All Rights Reserved.
1996 Today
Ove
rall
Adop
tion
B2B for Enterprise 1.0
Quick WinsSimplicity, UX
B2B for Enterprise 2.0
Hybrid Human+Tech Multi-Segment
+
+
PioneersEarly Niches
B2C 1.0Retail Disrupters
B2B for Independent
AdvisorsDisrupt RIA Vendors
B2C Pivots to B2B
B2C 2.0Retail Response
Evolution: From robo-advice to digital wealth
© 2017 MyVest Corporation. All Rights Reserved.
“B2B for Enterprise 1.0 is a quick win; B2B for Enterprise 2.0 is about strategic
business transformation.”
- Alois Pirker, Aite Group
$70$141
$204
$16
$25
$43
$171
2016 2017E 2018E
Estimated Growth of Digital Advisor Solutions ($ in Billions)
Retail assetsacquired bytraditionalincumbents
Retail assetsacquired by start-up digital advisorsdirectly
Vanguard,Schwab, Fidelity,E*Trade, TDAmeritrade
$400B
$90B
Market sizing & growth: Incumbents pulling away
© 2017 MyVest Corporation. All Rights Reserved.
$70$141
$204
$16
$25
$43
$171
2016 2017E 2018E
Estimated Growth of Digital Advisor Solutions ($ in Billions)
Retail assetsacquired bytraditionalincumbents
Retail assetsacquired by start-up digital advisorsdirectly
Vanguard,Schwab, Fidelity,E*Trade, TDAmeritrade
$400B
$90B
Market sizing & growth: Incumbents pulling away
© 2017 MyVest Corporation. All Rights Reserved.
“Banks and insurance firms will challenge this $171 billion growth
segment.”
- Anton Honikman, MyVest
3%
16%
31%
23%
13%15%
5%
15%13%
32%
20%
15%
Practice hasmade the
decision tolaunch a digitaladvisor service
Very interested Interested Somewhatinterested
Not interested We have notdiscussed
this/thoughtabout this
Q2 2017 Q3 2015
50% interested or
ready to adopt
(up from 33%)
Source: Aite Group survey of 369 financial advisors, Q2 2017 and 403 financial advisors, Q3 2015.
Q: How interested is your practice in leveraging new digital advisor technology over the next few years?
Advisor interest in new technology
© 2017 MyVest Corporation. All Rights Reserved.
3%
16%
31%
23%
13%15%
5%
15%13%
32%
20%
15%
Practice hasmade the
decision tolaunch a digitaladvisor service
Very interested Interested Somewhatinterested
Not interested We have notdiscussed
this/thoughtabout this
Q2 2017 Q3 2015
50% interested or
ready to adopt
(up from 33%)
Source: Aite Group survey of 369 financial advisors, Q2 2017 and 403 financial advisors, Q3 2015.
Q: How interested is your practice in leveraging new digital advisor technology over the next few years?
Advisor interest in new technology
© 2017 MyVest Corporation. All Rights Reserved.
“The sands are shifting. The fastest growing advisors see the
opportunity in new technology.”
- Alois Pirker, Aite Group
Response % of Population
Improve the clients' digital experience 46%
Acquire a new segment of clients 40%
Automate processes(onboarding, portfolio management) 39%
Offer clients more service options to best fit their needs and preferences 39%
Serve some of our existing clients more cost-effectively 34%
Meet the needs of any client/prospect... who prefers passive/low-cost portfolio management
32%
The “What”Q: What are (or would be) the practice’s goals for such a platform?
Response % of Population
Generation X (35- to 50-year-olds) 49%
Millennials(under 35 years old) 48%
High-potential clients (e.g., early career professionals) 47%
Children of existing clients 45%
Friends of existing clients who do not meet the minimum balance 27%
Parents or other relatives of existing clients 26%
Any client who does not meet our practice’s minimum balance 13%
The “Who”Q: What types of clients would your practice seek to acquire or service through a digital advisor platform?
Source: Aite Group survey of 369 financial advisors, Q2 2017.
Who will they target & what are their goals?
© 2017 MyVest Corporation. All Rights Reserved.
Response % of Population
Improve the clients' digital experience 46%
Acquire a new segment of clients 40%
Automate processes(onboarding, portfolio management) 39%
Offer clients more service options to best fit their needs and preferences 39%
Serve some of our existing clients more cost-effectively 34%
Meet the needs of any client/prospect... who prefers passive/low-cost portfolio management
32%
The “What”Q: What are (or would be) the practice’s goals for such a platform?
Response % of Population
Generation X (35- to 50-year-olds) 49%
Millennials(under 35 years old) 48%
High-potential clients (e.g., early career professionals) 47%
Children of existing clients 45%
Friends of existing clients who do not meet the minimum balance 27%
Parents or other relatives of existing clients 26%
Any client who does not meet our practice’s minimum balance 13%
The “Who”Q: What types of clients would your practice seek to acquire or service through a digital advisor platform?
Source: Aite Group survey of 369 financial advisors, Q2 2017.
Who will they target & what are their goals?
© 2017 MyVest Corporation. All Rights Reserved.
“As you can see, these digital advice platforms service nearly all client
segments and firm goals.”
- Alois Pirker, Aite Group
Brand
Customer base
Multiple service channels
Existing BD or bank
Client data
Product diversity
Research
Balance sheet
Incumbents’ unique advantages
But incumbents
have their own unique
challenges
Inertia
Lack of digital vision
Fear of cannibalization
Siloed legacy technology
Non-agile development culture
Fintech partnerships
can help bridge the
gap
© 2017 MyVest Corporation. All Rights Reserved.
“Incumbents will benefit most when they embrace fintech’s culture of change.”
- Anton Honikman, MyVest
Serve multiple segments
Value-added services
Robust client data layer
Incumbents’ new opportunities in digital wealth
© 2017 MyVest Corporation. All Rights Reserved.
Serve multiple segments
Value-added services
Robust client data layer
Incumbents’ new opportunities in digital wealth
© 2017 MyVest Corporation. All Rights Reserved.
“There’s so much opportunity in the amount of data firms have.
Start with the data and use it to hyper-personalize the experience.”
- Anton Honikman, MyVest
1. Invest in great UI/UX (table stakes)
2. Leverage your strengths
3. Seek out smart fintech partnerships
4. Move from simple segmentation to hyper-personalization
Incumbent recipe for
success
1. Invest in great UI/UX (table stakes)
2. Leverage your strengths
3. Seek out smart fintech partnerships
4. Move from simple segmentation to hyper-personalization
Incumbent recipe for
success
“Incumbents, now is your time.”
- Anton Honikman, MyVest
Learnmore
aitegroup.com
myvest.com
© 2017 MyVest Corporation. All Rights Reserved.