Wells Fargo plans to pilot a digital advice platform in early 2017, according to a high-ranking executive at the wirehouse.
The technology would eventually be available to all of Wells Fargo's brokers and clients, Devon McConnell, head of digital for Wells Fargo Advisors, told On Wall Street.
In making the move, Wells Fargo would be joining a growing number of large financial services firms that are entering a fast growing digital advice space. Charles Schwab, which was one of the early entrants, recently reported that its robo — Schwab Intelligent Portfolios — passed $8 billion in AUM. Betterment also recently reported that its AUM passed $5 billion.
That growth has spurred more firms to explore ways of entering the space, either developing the technology in-house or through partnerships with digital startups. Earlier this year, RBC said it was partnering with BlackRock's FutureAdvisor and UBS inked a deal with technology developer SigFig.
Wells Fargo currently has more than 15,000 advisers overseeing $1.4 trillion in client assets, according to its most recent earnings report. The firm's robo effort also is working closely with the firm's community bank unit, "because many of those clients are at a point with their savings that they would want that opportunity," says McConnell.
Wells Fargo recently announced that Mary Mack, head of Wells Fargo Advisors, would be taking over as head of the Community Bank on July 31. A search for her replacement is underway, according to the firm.
McConnell says that Wells Fargo's eventual robo adviser will make use of the bank's resources and intellectual capital, including Wells Fargo Investment Institute, a unit the bank created two years ago to provide investment research to the firm's wealth advisers and clients.
"We've been in this business a long time and we feel we are very strongly in that area," she says.
Quote"We are actively working on our delivery strategy. But most importantly we want to work on something that upholds our brand," Devon McConnell, head of digital for Wells Fargo Advisors, says.
Digital advice has a lot of room to grow. A mere 5% of investors say they've already used a robo adviser, according to a new study by Wells Fargo and Gallup, which polled 1,019 U.S. investors with $10,000 or more in investable assets.
Less than half of the investors still haven't even heard of the technology, according to the study.
But a lack of familiarity with robos doesn't mean clients are wary of new technologies. About 60% of investors said they'd be interested in working with an adviser who uses the technology. That figure went up for younger investors.
Among investors under 50, 64% say they are more likely to trust an adviser who offers them access to digital advice tools, according to the study.
However, clients still want access to human advisers, particularly when it comes to understanding risk tolerance and their portfolios. Over 90% of investors say a human adviser's best advantage is helping them understand their investments, the study says.
"I think what we are hearing from clients is that they want access to digital and human advice," McConnell says. "And depending on where they are in their life cycle, that gradient of human to robo advice can change."
McConnell also notes how quickly technology has been changing the space.
"We are actively working on our delivery strategy," she says. "But most importantly we want to work on something that upholds our brand."