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Raymond James to put robo in advisers' hands, joining digital advice race

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Raymond James will put robo adviser tools in the hands of its planners by the end of the year, making it one of the last major brokerage firms to announce digital advice plans.

The firm says the technologies, which have been developed in-house, will be used at the discretion of its more than 7,100 independent and employee advisers. There are no plans to offer a standalone service, according to Bella Allaire, executive vice president of Technology and Operations.

"The client will be able to, from the standpoint of the technology, be able to sign up online, create a model online, execute the model, but they will get there through an invitation from a financial adviser," she says. "The financial adviser will have the final say over whether the models are appropriate."

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Advisers will have control over the price charged to clients and they will be compensated the same as other assets, according to Raymond James, which announced the moves on Monday.

Allaire says the technology is designed to be compliant with the Department of Labor's fiduciary rule, which goes into effect April 10. There is currently much industry speculation that the rule could be delayed or reversed, given President Trump's promise to massively reduce regulatory burdens. For now, Raymond James continues to prepare for the rule.

"We'll have to wait and see. Meanwhile, nothing is stopping," Allaire says.

The firm's move to add a robo platform, even if it's not standalone, comes after many of its largest competitors unveiled their own similar plans. Digital advice has grown at breakneck pace.

Lex Sokolin, partner and global director of Fintech Strategy at Autonomous Research, says his firm projects that the digital wealth market could be between $500 billion and $1.5 trillion by 2020."The big variable in those numbers is the DoL fiduciary rule," Sokolin says.

He adds: "That delta is driven by whether firms will have to follow the DoL fiduciary rule. If so, then more assets have to be digitized. Firms will have to adopt more digital-type technologies. If it's delayed, adoption may slow. But the terminal point is the same."


CEO Paul Reilly has previously said that Raymond James would not have a robo adviser, but would explore technologies that would help its planners gather assets.

Allaire said that the firm's technology plans have been in the works for a while. She couldn't specify how much the firm spent on developing these specific technologies, but says that Raymond James spends about $250 million per year on its technology budget.

In developing the technology itself, the St. Petersburg, Florida-based firm is bucking an industry trend. Many of its competitors have opted to tap outside talent. For example, UBS partnered with technology developer SigFig and RBC teamed up with FutureAdvisor. And some firms have chosen to acquire digital startups; BlackRock bought FutureAdvisor.

"It is very important to us to provide ease of use and accuracy of data. In my experience, you can only accomplish that by creating your own data platform. If you start switching data between your platform and a tech provider, you end up with inconsistencies," Allaire says.

She also pointed to the uncertainty around the fiduciary rule.

"That's another reason to have your own software. We can move so much easier, and it's much easier to adjust with your own platform rather than working with a vendor. It's much more conducive to not disturb the financial adviser," she says.

Sokolin says most firms are opting to look outside for a robo solution.

"The difference between building it and renting comes down to the following: Do you want to use existing infrastructure?"

But no matter which route they take, every firm is moving towards developing some kind of digital platform, he says, from pure standalone robos to hybrids to robo tools in human hands.

"Every financial institution in the business of providing financial advice will have digital technology," he says.

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