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Robo-Advisors are Becoming a Factor to Customer Acquisition in the Wealth Management Industry

In 2017, the wealth management industry’s focus on increased profitability must balance responding to regulations with developing the agility to acquire the next generation of clients. Effectively applying new technologies for efficiency will be key. Wealth management firms are increasingly using Business Process Management (BPM) to improve client onboarding along with robo-advisors to integrate core advisor desktop components to increase advisor productivity.

The Department of Labor Fiduciary Rule slated for deployment in April is now delayed due to the new administration’s actions causing confusion in the industry. Whether the date is delayed, the rule changed, or cancelled completely, it has already had the effect of driving more automation around the enforcement of regulatory compliance, which has positive benefits. Regardless, the industry is waiting for this to be resolved as it does not like uncertainty.

Automation increasingly provides the foundation for firms to acquire younger clients and heirs along with developing and engaging the next generation of advisors. To do this, organizations must develop a more effective advisor compensation model. This is connected to the rise of robo-advisors. The robo-advisors start with simple objectives and a focus on low cost of service using an algorithm-based approach to look after the client’s interest. This is essentially a “set and forget” approach for asset allocation.

Additionally, an robo-advisor uses insight from reserach to teach clients how to understand and improve their financial situation, explains the firm capabilities and their value to clients, and demonstrates value to clients by articulating progress toward goals. Clients are beginning to prefer goal-based achievements instead of focusing on the traditional metric of beating market indices. It is interesting to note that large wealth management firms such as Charles Schwab and Fidelity Investments have been successful in providing robo-advisor technology and are indicating mainstream acceptance.

The client onboarding process is also recognized as critical in establishing the relationship with the new client, and the traditional lengthy processes lasting weeks or months can abort the relationship before it has begun. The client’s impression of the firm is established when they first begin to transact business together. This comes into place as the client signs the many forms to establish the account, begin the asset transfer process, and completes other agreements that might be needed, such as margin and powers-of-attorney.

Until recently, signing the agreements was a routine and acceptable start the relationship. After all, it was not too long ago that the advisor interacted with the client via phone or mail. In today’s digital age, technology brings the client and advisor closer together, and customers expect accelerated onboarding.

However, with increased regulations, more parties must be involved. For customers expecting speedy and seamless interactions, this causes confusion. For example, the sales support team may reach out to the customer to collect specific information. The Know-Your-Customer process may include due diligence on the client’s attorney and accountant. Then the firm’s credit, compliance, and legal departments must also review and approve.

This potentially can lead to confusion if not handled correctly, and firms are increasingly applying BPM systems to the onboarding process. A BPM-based solution automates the workflow, provides transparency to all participants, and speeds up the onboarding process. Unfortunately, many firms have not yet implemented this automation, and the new complexity may cause new clients to withdraw if the first impression given is one of confusion.

With customer expectations for speed and seamlessness, the wealth management industry will continue to innovate to gain new customers, create better relationships and increase profitability.


Coforge is aligned to these industry priorities with a focus on automation through all aspects of the customer lifecycle. Learn how banks and financial institutions continue to innovative IT strategy to thrive despite the challenges in today's digital environment.

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