Susan Glover Insight & Advice

Do Robo-Advisors Use Excel?

Published on Tuesday, February 24, 2015

Do Robo-Advisors Use Excel?

  • That and other questions will be helpful while addressing your firm’s infrastructure, in light of the robo-advisors onset.

    Opinions on robo-advisors range from fear of competition to not impacting an advisor’s business. Regardless of where you are on the opinion spectrum, you should take this time to review areas of the robo-advisor’s success and compare them to your business model and infrastructure. Don’t dismiss their arrival and success as a fad that will disappear in a few years. This is a good time to ponder how their success translates to what your firm can do.

    If you feel the review process is overwhelming, start by using questions about robo-advisors and your firm to determine areas that may necessitate change. Your review may find that many of the successful traits of robo-advisors will not be right for your firm.

  • “Do robo-advisors use Excel?” If you feel that technology and sophisticated software are part of their success story, then examine why you are still using Excel for applications that should be left to more efficient software. In fact, this is an opportune time to evaluate whether your technology is still the right solution for your business. Think about what robo-advisors are using, or not using, the next time you open up that rebalancing spreadsheet.
  • “What can robo-advisors do with their technology that you can’t do?” It’s not as much about whether their technology is actually better than yours; they are perceived as having better technology.  Robo-advisors show their clients how great their technology is. They combine data and information to deliver a story in a format pleasing to the client. It’s also about how the information looks from a client’s perspective and how they look on all devices. What does your technology show your clients?
  • “Will robo-advisors low fee structure last forever?” While we know that nothing lasts forever, we don’t know what their plan is regarding fees. While advisors are currently faced with fee pressure, robo-advisors may face revenue pressure that will require them to modify their fee structure. Think long-term when considering changes in your fee structure. How will changes impact your current clients and revenue stream? What will clients think if you keep changing your fees?
  • “Do robo-advisors consider their infrastructure a cost or an investment?” I find it hard to believe that their business decisions were based on cost alone. Robo-advisors created a business plan and built the infrastructure to support that plan. If I had a dollar for every time an advisor said “Wow-that’s expensive….”
  • “Are you trying to compete with robo-advisors or run a business?” Perhaps robo-advisors are forcing you to consider changes to your business model. But it doesn’t end with just the decision to change. What you consider as simplifying may be difficult to implement without disruption. Understand the impact of your decisions on your infrastructure, especially your staff.

When it comes to running your business, there is no such thing as too many questions.

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