Bryan Beatty in Investor's Business Daily, "How Savvy Practitioners Win Battle With Robo-Advisors"

Bryan Beatty Profiled in Investor's Business Daily Article, "How Savvy Practitioners Win Battle With Rob-Advisors"

By Morey Sterner

September 11, 2015, Investor's Business Daily - The rise of robo-advisors poses a challenge to traditional financial planners: They must show how their experience, expertise and judgment justify their higher cost.

To differentiate themselves from online, algorithm-based services that automatically rebalance portfolios and allocate assets, human advisors are responding in many ways. Some limit their practice to high-net-worth clients with complex issues, thus avoiding direct competition with “robos.” Others court younger clients by adopting strategies straight out of the robos’ playbook.

Bryan Beatty, a certified financial planner at Egan, Berger & Weiner in Vienna, Va., prefers to ride the robos’ coattails to woo millennial clients. He’s embracing technology and integrating it into his practice.

“Millennials want the automated tools that robos provide,” he said. “If you’re an advisor who can’t handle that, they’ll go to a robo.”

Beatty, 48, notes that most financial advisors over age 50 did not grow up with computers. As a result, they may struggle to gain younger clients who rely on mobile apps and social media to connect with the world. But Beatty tries to stay one step ahead. Since 2012, his firm has offered online financial planning tools for clients. They can set financial goals and track their spending through a single-user interface.

“This way, they don’t have to come to our office,” Beatty said. “They can connect to their bank and mutual fund accounts, set budgets and add goals. We offer data aggregation of all their accounts.”

In the coming year, Beatty plans to add more robo-like services to his practice. His target market: Millennials who don’t yet need a full-fledged advisor.

“They’ll get their feet wet with an automated tool that matches their investment risk to a portfolio,” he said. “Later on, they’ll turn to a financial advisor for more complicated advice and planning strategies.”

Like other forward-looking financial advisors, Beatty knows that today’s millennials represent tomorrow’s affluent class. That’s one reason he wants to leverage low-cost investment platforms to attract up-and-comers who like to go online for answers to their money questions.

Dog Or No Dog?

Robos currently wield a pricing advantage over traditional advisors. They also tend to earn high marks from users for easy navigation and customization features. But such competition doesn’t worry Beatty.

“What people want to pay for is personalized advice on financial planning,” he said. “So even if I see our robo component as something we have to offer at zero profit, I’m not giving away the cow. I’m giving away some milk, maybe some ice cream. But over time, (clients) will see how complex it all is and I’ll be there for them.”

Financial advisors who ignore the robo phenomenon risk losing the next generation of clients. That’s because robos will manage roughly $2 trillion in the U.S. and control 5.6% of Americans’ investable assets by 2020, according to a 2015 study by consulting firm A.T. Kearney.

Some robos combine automated investment management with phone consultations with an advisor on staff. But independent advisors, who seek to foster long-term client relationships, don’t seem overly concerned.

Peter J. Creedon, a certified financial planner with Crystal Brook Advisors in Mt. Sinai, N.Y., cites a client in her 20s who came to him after a bad experience with a robo. Facing a personal budget squeeze, she spoke with a staffer at a robo service who urged her to save money by getting rid of her dog.

“She didn’t leave (the robo-advisor) with a warm, fuzzy feeling,” Creedon said. “I looked at it from a different perspective. Instead of just cutting costs, I looked at how to make her business more successful. We did a business plan to ensure she could make certain numbers. And she was able to keep her dog.”

Another way that advisors steal some of robos’ thunder is by expanding their online educational offerings. Some traditional advisory firms are beefing up free content on their website to create more interactive financial planning tools.

Free Online Tools

For example, Beatty’s firm’s website provides dozens of calculators for users to crunch their own numbers to analyze Roth IRA conversions, mortgage loans and even how much savings can accrue from bringing a bagged lunch to work. Giving away so much information makes sense for the firm.

“We do a lot of education and store it all online for anyone to use,” Beatty said. “But we find our younger clients are more receptive to it.”

While the firm’s online resources help it compete with robos, the real differentiator is the level of engagement that advisors like Beatty provide. He recalls a client in her mid-30s who joked, “You’re more like my life advisor than my financial advisor.”