From cloud-native payments to back-office robotic process automation (RPA), automation can be found in no-fuss applications across the banking ecosystem, but wealth management is tougher to automate — and robo-advisors are especially tricky.

Traditional wealth management centers around person-to-person interactions, and this was precisely the challenge TD Bank, a subsidiary of $1.73 trillion TD Group, faced when building TD Automated Investing, the bank’s robo-advisor platform, Ken Thompson, head of U.S. wealth shared services at TD Wealth, told Bank Automation News.

The bank’s robo-advisor automates client onboarding, risk tolerance, rebalancing and monitoring. There is also an option for customers to upgrade to TD Automated Investing Plus, which includes guidance from TD financial advisors and access to a financial plan, according to its website.

In building the bank’s robo-advisor, a five-step wealth management process was considered, Thompson said:

• Awareness, when the financial institution ensures that the client understands its wealth management capabilities;
• Discovery, when the FI seeks to understand the goals of the client;
• Consideration, when the FI presents workable solutions;
• Onboarding, which covers know your customer (KYC), anti-money laundering (AML) checks and background information; and
• Servicing of client goals.

“Whether it’s TD or any other wealth management firm in the United States, they’re going through some version of that,” Thompson said. “If that’s the foundation when you go to automate it, you really must automate everything. You have got to automate every stop,”

Robo-advising engine

The engine of TD’s robo-advisor capabilities hinges on automation. Whether gathering information on a client’s level of risk acceptance or executing a portfolio rebalancing, the robo-advisor is a deeply automated solution, which Thompson said provides a “seamless” experience through a blend of internal bank-side developments, APIs and external fintech partnerships.

“A lot of this exists in our own digital properties as a financial institution,” Thompson told BAN. “In other places, we have partnered with fintechs or clearing firms to provide those next pieces to the puzzle. And they’re all coordinated together to make it seamless to the client so that the client sees TD from the beginning part to the end.”

Fintechs play a significant role in the robo-advising experience; Thompson broke out automated onboarding as an area that was easier for TD to buy than build. However, the “mountain of work” still falls to TD, with two-thirds of the process remaining in-house, he said.

Development pain points

While deploying automation to replicate person-to-person wealth management experiences is critical, facilitating smooth fintech integrations is also important, Thompson told BAN.

“We can do a certain amount as a financial institution, naturally. We can build certain things as well. And then we can also build, buy, or rent. In our case, it’s a mixture of all the above,” Thompson said. “The pain points are, as financial institutions integrate fintechs into their environment, there are all the considerations that go into integrating.”

FIs must be aware of how fintechs “on-ramp” into the existing enterprise architecture of the organization and should ensure they offer a customizable, differentiating experience, he advised. Additionally, when a fintech enters the ecosystem, the process is no longer end-to-end from the bank perspective; FIs must be aware that some fintechs will not be up to exacting internal standards. For TD, this was an issue of accessibility.

“As an institution, accessibility is very important to us. And [the fintech] may be at a different phase,” Thompson said. “So, negotiating with them to get that up to the same accessibility standard you have as an organization is going to be a friction point in the bill if you decide to [go] third party. Additionally, once the client is with that third party, you may lose line of sight to different parts of the journey,” he added.

On the horizon

Integrating third-party applications — from Youtube videos to digital goal-tracking tools that feed directly to the robot — will be crucial for TD going forward, Thompson said. These applications will focus on answering the needs of “top-of-funnel” clients who come to TD for advice or information with the goal of nudging them into other business areas outside of wealth and portfolio management.

In addition, TD is working on incorporating capabilities for robo-reading of facial expressions, Thompson told BAN.

“I can tell when you’re leaning into the conversation and when you’re pulling back. I can also tell when I’m not clear. That’s really hard to do in a digital environment, and we think that we have to figure that out,” he said. “How can we ask questions differently? How can we tell whether it’s the right question at the right time? Understanding how to replicate that part of the journey is important.”

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