(Professional Planner) - Advisers who have built a name for themselves in the media are increasingly leveraging their brand and partnering with robo providers to capture a larger slice of the market.
Collins House Private Wealth founder Dominic Alafaci has over 40 years in the industry and is well-known through his long-running appearances on Melbourne’s 3AW radio network.
Despite his profile, Alafaci can only service so many clients. So he set up a partnership with robo-investment services provider OpenInvest to provide clients with a white-labelled investment portal under the auspice of general advice.
“Being well known, I can’t just fob people off and not help them,” Alafaci tells Professional Planner. “At least this way I’ve got a solution for some of the people who can’t justify the fee structure.”
For a much lower price clients can choose one of six portfolios on the Collins House Online website, which are essentially run as managed accounts by the Collins Wealth team.
“Usually they’re just accumulators or retirees who want to invest but don’t want a complicated Statement of Advice,” he says.
The requirement to provide SoAs makes advice prohibitive to many consumers, the adviser believes.
“Preparing SoAs for clients with low levels of savings is ridiculous,” he says. “They don’t like them and they don’t want them.”
The Netflix model
While financial advisers have typically taken a dim view of robo-advice providers, white-labelling arrangements have the potential to facilitate more productive relationships between the two.
According to OpenInvest co-founder Andrew Varlamos, online investment facilitators add scale to an industry struggling with its regulatory settings.
“We’re like a Netflix model in a way that we’re delivering intellectual property that’s too expensive to deliver face-to-face,” he says. “Advisers can now tell people their fees are going up but they also have a cheaper alternative that the client may find appealing.”
The arrangement also keeps the client “within reach” of the adviser, Varlamos adds.
Zella Wealth adviser Victoria Devine has adopted a similar model to Alafaci, partnering with robo-advice provider SixPark to offer her clients and followers access to a white-labelled investment solution at a lower cost than a full-service advice proposition.
Devine has built what is probably the broadest mass market following of any licensed adviser in the country through her podcast, She’s on the money, which has 1.1 million monthly listers, and a facebook page with over 170,000 members.
More recently, Devine was inducted in Forbes’ 30 under 30 list of young entrepreneurs.
Devine maintains a book of 90 advice clients but has hundreds more clamouring for her brand of advice, which is where the SixPark collaboration comes in.
“The people I’m servicing on the SixPark platform are ones that might not have been able to entertain my full service offering,” she says.
“I’m not trying to palm them off but I don’t have the ability to service so many personal clients, plus the cost factor might not work for all of them. This lets me access a whole new demographic of people.”
While Alafaci’s white label offering is given as general advice, Devine says the clients that sign up through her app go under SixPark’s license and receive advice from the robo-investment provider.
“It’s a collaboration between the two where we both bring different things to the party and we kind of have a relationship, which means they’re still my clients – SixPark are just looking after them for the moment.”
The SixPark offering is ultra-low cost, starting out at $9.95 per month, which opens up a huge tranche of possible clients for Devine.
“I can’t produce an SoA for $120 a year,” she says. “I can’t do that as an individual.”
And while high-profile advisers like Alafaci and Devine are at the vanguard of a movement towards professional relationships between advisers and robo-advice providers, both agree the arrangement could work for a lot more advisers.
“I don’t see why it wouldn’t. It provides such value to the community and advisers get to service clients they otherwise wouldn’t be able to,” she says.