As more wealth management firms roll out robo advisers, including those that once pledged not to dip a toe in digital advice, one brokerage is striving to maintain a human touch.
Edward Jones, which has nearly 15,000 advisers and $963 billion in client assets, has no plans to add a robo adviser to its offerings, says Jim Weddle, head of the firm.
"We work with the serious long-term investor. We don’t serve the do-it-yourself [client] or the people that are intensely price conscious. If we did, we’d probably have to offer robo advice," Weddle says. "There are channels out there that do a wonderful job. But we are more than willing to give up that piece of the marketplace to those folks."
Make no mistake, Weddle says; the St. Louis-based brokerage is working on client facing technologies, and devotes resources to making sure it keeps abreast of client trends. For example, Edward Jones' advisers can text with clients.
But it's the firm's approach to digital advice sets it apart from rivals.
"I think that companies that choose not to go with the herd do so with courage when they understand and are making a deliberate business decision. Depending on the business mix they have, it might well work for them," says Uday Singh, a partner in the financial institutions practice of A.T. Kearney, a global strategy and management consulting firm.
Singh also says that it helps that the fiduciary rule is set to be delayed and potentially rolled back. "That allows the broker-dealer model, which is commission-based, to have a longer runway in the marketplace," he says.
There's now a plethora of digital first startups, banks and asset managers operating in the marketplace.
Bank of America Merrill Lynch launched a robo offering this month. UBS, Morgan Stanley and RBC are working on similar platforms. And Raymond James, which previously stated it wouldn't offer a robo adviser, recently said it plans to roll out such an offering for later this year.
Raymond James said the technology is not a standalone robo adviser, noting that it will be used at the discretion of its more than 7,000 advisers.
But is it a case of calling a rose by another name?
Lex Sokolin, global director of fintech strategy at Autonomous Research, says that firms are adapting aspects of robo advisers, if not the whole thing.
"At the end of the day it's the same technology. It's the same engine, all the same stuff," Sokolin says. "If we look across the wealth management spectrum… all of them are essentially using digital wealth technology but calling it different things."
Weddle acknowledges that robo adviser platforms have "slick functionality." His firm will adapt those pieces that fit the Edward Jones model while emphasizing the centrality of the adviser-client relationship.
"We feel like the relationship that the FA delivers on is the way we compete. We are not going to develop a robo channel, an alternative to working with our financial advisers," Weddle says.
'CLIENTS FEEL EMPOWERED'
Edward Jones has long pursued a unique approach to the business. The wirehouses maintain sizable branch offices in the center of large wealthy markets. But Edward Jones has solo advisers operating in small offices closer to where their clients live, such as rural towns and suburbs.
The firm's approach to technology is intended to reinforce its core business model, executives say.
"When you think about a client going into a branch, they will have an emotive experience. They will feel listened to, feel empowered," says Vinny Ferrari, chief information officer at Edward Jones.
"When they go on a website, they don't necessarily have an emotive experience. It goes from an emotional experience to a functional one," he adds.
As the firm designs new technologies and digital tools, the focus is on how they support the client-adviser relationship, he says. For example, the firm offers advisers tools that let them work remotely with clients.
And although Edward Jones does outsource some technology functions, the firm generally prefers to develop them in-house.
"If you can buy it from a developer, then other people can too. It won’t be a source of strategic differentiation," Weddle says.
Ferrari says that the next key innovation area the firm will focus on is big data tools and analytics.
"Technology is changing things faster and faster. You need to think about the changing expectations of clients as well as advisers," he says.
But even with evolving expectations of what the technology tools can do, it still comes back to that emotive experience, Ferrari adds.
"They want to be able to get on it, understand it, and they are going to feel empowered with it," he says. "If they don't feel that, they aren't going to come back."