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JPMorgan Wealth Chief: Robos Can’t Replace Humans

March 2, 2017

Robo-advisors have had an easy time attracting billions of dollars in client assets because they did so during relatively easy markets, according to the head of wealth management at JPMorgan, the Financial Times writes.

Speaking to investors at a presentation earlier this week, Mary Erdoes, the company’s head of asset management and wealth management, said that during tough times, “human beings need human beings to explain the world to them,” according to the FT. Software alone will not be enough for clients during more volatile times, she said, noting that Siri, Apple’s digital assistant, “is not going to hold your hand,” the paper writes.

Nonetheless, JPMorgan said last September it plans to trial a robo-advisor later this year in partnership with InvestCloud, according to the FT. The platform is not merely aimed at the mass affluent — it’s planned to even serve ultra-high net worth clients at JPMorgan Private Bank, a person familiar with the company’s plans tells the paper.

Other large brokerages have started to add robo-advisors to their array of wealth management services prompted by the billions in assets that have gone to robo-advice pioneers such as Betterment, Wealthfront and Personal Capital, the FT writes.

Earlier this week, Wells Fargo Advisors said it’s starting a pilot program on a platform it designed in partnership with robo-advisor SigFig. Merrill Lynch launched a robo-advice service last month, although unlike JPMorgan’s planned digital advice service, Merrill’s is aimed at capturing clients who otherwise can’t afford its traditional advisors. Raymond James plans to roll out its digital advice service in stages this year and into 2018.

Robo upstarts are feeling the pressure and revamping their business models as a result, the FT writes. Some firms that previously focused on robo-advice alone are getting into mortgages and insurance, according to the paper. Betterment, meanwhile, said it will begin offering premium services on its platform that will allow clients to speak regularly with the firm’s team of financial advisors, the FT writes.

By Alex Padalka
  • To read the Financial Times article cited in this story, click here.