Why settle for a cookie-cutter robo relationship when the next generation of platforms lets you build your own portfolios without sacrificing any of the efficiency of automated approaches?
For years advisors who've balked at outsourcing client portfolios have gotten hung up on one of two horns of a dilemma.
On one side, it's hard to break entrenched industry arguments that the value advisors deliver revolves around the stocks they personally pick. Generations of advisors earned their fees on those terms. While other value drivers have emerged since, old habits die hard.
And while farming out the stock picks can liberate the typical firm from endless repetitive and redundant work, it's a challenge to turn internal efficiencies into a real differentiating proposition. When everyone is selling the same "best of show" strategies, how do we compete?
Yesterday's corporate marriage between Orion Advisor Services and FTJ FundChoice answers both sets of questions at once.
Orion already gives advisors the ability to differentiate themselves by creating their own SMA portfolios, ready to roll out across an entire book of business and nimble enough to support client-by-client tax optimization.
It looks like traditional bespoke stock selection, with all the competitive sizzle that entails. Advisors who use Orion's ASTRO program can add their "special sauce" with all the tilts they find appropriate and their clients (with their own legacy situations and ESG urges) deserve. Those accounts are unique. The competitor across town and the robot halfway around the world doesn't offer quite the same blend of expertise and insight.
But the technology is fast and cheap enough to compete head to head with the robots, and once the accounts are created, automation keeps them running. They learn from you. You can go on to prospect new accounts and create new strategies.
If I'm reading it correctly, Orion just gave you the power to build and run your own robot instead of buying one from someone's shelf.
“Until now, the high costs and massive time commitment associated with building highly customized separately managed accounts prevented financial advisors from bringing these capabilities to clients,” said Eric Clarke, CEO of Orion. “The powerful technology fueling ASTRO empowers advisors to accomplish all of the above in minutes at a fraction of the cost.”
He knows differentiation is in short supply these days.
“As investment management continues to become increasingly commoditized by robo advisors and low-cost products like ETFs and index funds, advisors must find new ways to demonstrate their value to increasingly savvy investors,” Clarke said.
We talked about the system when it first went live, but now that FTJ FundChoice is at the Orion table things get even more interesting.
FTJ FundChoice is a "traditional" TAMP if there is such a thing, with about $10 billion on the platform and a full menu of funds, models and strategies.
The platform always supported the option of advisors building their own proprietary strategies when it made sense. Obviously it does -- everyone wants the ability to woo prospects with a "special sauce" -- but taking advantage of it requires a lot of work and more than a little investment.
Bridging the gap via ASTRO gives FTJ FundChoice affiliates a relatively smooth path to customization. They can build as much as they want into the client experience or go with the out-of-the-box strategies.
Either way, it's up to them -- and they have no room to complain that the experience doesn't support extremes in terms of independence or conformity.
It's a natural fit. The companies were already working together, with Orion providing the technology tools around the FTJ FundChoice strategies. Integration will be a breeze.
And once the systems are fully integrated, I think we'll look back at this corporate transaction as something a lot more exciting than another bolt-on acquisition. Maybe this is the first of a new wave of investment platforms, playing all the spots between rote robo automation and old-school bespoke portfolio curation.
But that's a little heavy on the buzzwords. For advisors on the ground looking for a way to use robo without getting absorbed into the hive mind, it's simpler than that.
Pick a spot. Grab the margins. Chase the accounts. Do what you do best.
