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Technology Platform Disruption and the Independent Advisor

By: Frederick B. Kauber, Managing Director & CTO | Head of Marketing & Technology

The tsunami that is technology-driven innovation and disruption has washed across our personas as consumers and professionals and is becoming a familiar and indispensable presence in our lives. This is evident simply by looking around as we walk down the street to see our fellow passersby catching a Pokemon or hailing a cab from Uber all from the same device.  The interfaces and expectations with which we consume information and increasingly interact with the physical world have been transformed over the past decade, and that’s simply when we pause to consider the implications of only the smartphone and the app ecosystem; other seismic shifts have occurred with respect to social media, Big Data and more. This onslaught of transformation has come to wealth management later than other industries, but the fact that there is a specific term – fintech – that encapsulates all disruptive financial services innovation suggests that independent wealth managers can only ignore this trend at their peril.

Futuristic Technology and Disruptive Technologies Worldwide as Concept

There are several macro technology trends which pose implications for the wealth management industry and independent advisors, but none have epitomized that better than robo-advisors. Robo-advisors have widely been regarded as a threat to the advisor business model with their ability to deliver ‘personalized’ financial advice in a cost-effective, scalable manner. While robo-advisors have gained substantial traction with respect to assets under management, with $19 billion AUM in 2014 that Is projected to reach $255 billion AUM in 2020 according to MyPrivateBanking Research, the evidence suggests that the threat is not as direct as one might think. Despite impressive growth projections, there is friction in the robo-advisor growth equation in that their low-cost orientation cannot fuel indefinite customer acquisition and therefore growth will plateau. The level of personalized advice that robo-advisors can provide will certainly need to operate within a set of parameters that, at a macro scale, might approximate commodity advice that could be appealing to a segment of the investor market that has homogenized needs or an orientation toward self-service, but will not be appropriate for more sophisticated investors. In this regard, the true financial expertise that an advisor wields will be more adaptable and appropriate for higher net worth investors who tend to have more tailored needs. This suggests that robo-advisor technology might soon be a tool to be wielded by wealth managers to address the less affluent segment of the market, and clearly the launch of Fidelity Go and M+A activity in the robo-advisor space are indications that robo-advisor technology is being embraced by advisor-oriented enterprises.

While the rise of robo-advisors does not directly jeopardize the high net worth client segment for advisors, savvy advisors are focusing on clearly differentiating their service offerings to provide a level of care that exceeds expectations and justifies the fees associated with advising high net worth clientele.  This differentiation will require investment in personnel and infrastructure, and must be done as efficiently as possible to preserve margins. The efficiency orientation provides a compelling case for advisors to harness technology platforms of a different sort, namely those specialized advisor platforms which have risen in parallel with robo-advisors to better serve wealth managers rather than disintermediate them. Specialized advisor-centric platforms that offer value-added functionality such as Orion for portfolio reporting or CAIS for financial product access and execution can cost-effectively allow advisors to provide a customized, full-service offering to their clients.

As a fintech platform as well as thought leader focused specifically on leveling the playing field for the independent advisor, CAIS is constantly scanning the technology landscape to anticipate how core technologies and platforms will impact advisors. This practice has led to our integration with major wealth management platforms such as Fidelity, Envestnet, and Orion as we seek to complement those partner platforms with CAIS functionality and content to maximize the advisor experience across whatever platforms that advisors may deem relevant. We will seek to explore technology trends and their impact in our CAISInPoint newsletter as well as on our blog so that advisors and their clients may benefit from our perspective. I look forward to hearing your thoughts on these trends and other areas of interest as well; please feel free to contact me via


Fred Kauber is Managing Director and CTO of CAIS Group, and is responsible for all marketing and technology initiatives at the firm. Mr. Kauber is an accomplished leader and entrepreneur with over 25 years of experience in technology, online marketing, product management/development and operations leadership roles and has formally served in the role of CIO/CTO for more than half of his career at Fortune 500 and entrepreneurial ventures alike. He is an adjunct professor in NYU’s Management of Technology and Innovation program and a mentor at Columbia University’s Center for Technology Management.