Financial Times — FAIQ Feature: New Firm Helps Advisors Fight Off Robos

By Thomas Coyle

A new tech firm is out to help advisors distinguish themselves from traditional rivals and encroaching robos alike.

Totum Wealth, a Los Angeles-based analytics provider, last week launched its flagship platform giving advisors tools to customize client portfolios in ways typically out of reach to retail clients.

Instead of taking note only of a client’s age,wealth, risk tolerance and retirement horizon for purposes of portfolio construction and maintenance, Totum lets FAs add factors like profession, geographic location, physical health, real-estate holdings and size of family as well as balance-sheet considerations.

If for instance a client lives where one industry is especially important — think technology in the San Francisco Bay Area — Totum might suggest diversifying from this sector in the client’s investment portfolio. And if a client is in especially good health it might suggest gearing up to save for a longer-than-usual lifespan.

The people behind Totum Wealth say this sort of customization is especially attractive to so-called Millennials — whom RIA-based FAs say are crucial to their long-term viability, according to a new study by TD Ameritrade. The trick is to win these relatively down-market clients and keep them as they become wealthier and more profitable — and do it in the face of increasing competition from cut-rate robo portfolio-construction platforms.

Totum is for “people like me and my friends, and we’re obnoxious,” says Totum Wealth’s CEO and co-founder Min Zhang. “We don’t want to pay for anything but we all want to be served differently and made to feel special.”

But Totum isn’t just for impressing fussy thirty- and forty-somethings — at least not according to Zhang, a former product manager at Pimco. In taking a more detailed view of investor risk, she says the platform brings institutional-strength investment analytics to the broad retail market.

As an advisor who’s been beta testing Totum for nearly two months, Robert Dalie agrees. The head of investing for the Summa Group of Oppenheimer & Co., a Los Angeles-based team with about $1.5 billion under management, his wealthiest clients — worth $20 million and more — are used to nuanced oversight of their financial lives. But for his “unsophisticated clients,” he considers Totum “a great tool for a visual presentation of where things stand for them,” he says.

In putting human capital at the core of investors’ financial lives, advice-industry analyst Alois Pirker thinks Totum is on the crest of a wave of technologies supporting the view — espoused by firms like United Capital and Morningstar — that advisors have to be life managers, not justwealth managers, if they hope to survive the coming onslaught of automation.

“The strength of robos is in providing straight-through processing for managed accounts,” says Pirker, head of wealth-management research at Aite Group. “What’s left for advisors is to get really strategic about the client as a person — that’s how they’ll be able to justify their pricing.”

Totum’s price starts at $128 a month per FA. It comes with a 90-day free trial and there’s no limit on the number of clients.

Like what you read? Give Min Zhang a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.