It is said that robots are going to take over the world and that within 30 years 15 million jobs will be taken away from humans to be done by robots. In some areas it seems some progress has already been made as evident in the rise of the robo financial advisor. However this doesn’t mean that independent financial advisors should be worried.
Technology is of course here to stay and is developing at a massive speed. And it is technology which appeals to the young in particular. For the young independent financial advisor just starting out in their career discovering the wonders of the robo advisor with its low cost and ease of use may be the right way to go. Similarly, for the young investor just starting out they may automatically go for what they think they understand – which is technology.
Relationships are key for IFAs
However the fact is that financial planning and advice relies on the advisor and the investor having a good relationship. Trust between the two is an important factor. And although online advisory platforms – to give them their proper name – can work for a few they are not for everyone. An online platform lacks the capacity to form relationships, personalise a client’s portfolio or make complex personal and planning decisions.
A financial advisor is uniquely placed to become a powerful ally for their clients. By understanding what a client’s needs, aspirations and risk tolerance are an independent financial advisor can make recommendations and provide assurance for nervous clients. A robo advisor can do such thing.
Algorithms cannot read customers like you can
In some ways robo advisors are barely more complex than the questionnaire style scripts that prevail in call centres and as such they cannot determine a client’s true thoughts or compile a full and accurate picture of the client’s situation. As an independent financial advisor you can read between the lines of a client’s complex needs and bring some human discretion to a situation when required.
Although online advisory investment platforms are probably here to stay we see little reason to worry. The fact is, most investors expect personalised attention and assurance before investing their hard-earned money and they can only get that from a human. We believe that even younger tech-savvy investors will soon tire of the mass-marketing style approach and will want to return to speaking with a real person who understands their worries and their needs.
There’s no reason to believe there will be any significant impact on financial advisor recruitment.