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UBS made a huge investment in acquiring the robo-advisor Wealthfront. But neither this investment nor any other robo pose a threat to traditional financial advice.
I have been reflecting on major trends in the advisory profession that don’t die. For many years, everyone has been worried about robo advisors replacing human professionals. Sadly, for this technology lover who would be totally cool with tech taking over the world, it’s not going to happen.
It is never going to happen.
Tech that enables the need for a human touch will drive growth for advisors. Here’s why.
Talking to a real person is still a thousand times better than talking to a computer or a chat bot. We experience this in our everyday lives – I don’t care what bank’s 1-800 number you call about an account issue, the automated operator says, “Tell me why you’re calling.” You tell the bot. It then responds by sharing your checking account balance, a laundry list of options that have nothing to do with why you called, the option to opt-in to a free survey, and then perhaps puts you through a few other hoops before you are put in touch with a living, breathing person. I personally just dial zero indefinitely until I talk to someone. But alas, even that strategy doesn’t always work.
Talking to a person is necessary nine out of 10 times to get our needs met.
People want insights that come from advanced data analytics and artificial intelligence (AI) technology – but that doesn’t mean they want a robo advisor or a bot to be the one that breaks that data down for them on the phone. One essential way financial advisors can maintain relevancy is to offer tools to those they serve that can read large amounts of data and translate it into meaningful information about an advisor’s clients. For example, we are exploring the use of data analytics to recommend the next best step for the advisor to take with a given client.
Let’s use an anecdote to fully understand why this functionality highlights the need for collaboration with advisors. Say that I am your client, and I am nearing the ripe age of 85. The artificial intelligence program would see that, and then let you as my advisor know that I am approaching this age and have two children who will be the beneficiaries of my large estate (fingers crossed that by the time I am 85, this will be true). Though my children likely won’t have the same amount of wealth to manage as their predecessor, they will need guidance and financial services to manage the large inheritances being left behind. In this scenario, the AI might recommend that the advisor schedule a meeting with me and my kids to discuss estate planning for what happens after my death. The advisor can then either take the suggested action or choose to do something different based on their own knowledge of the relationship.
That right there is the key.
Envision a robo advisor on its own attempting to handle the above situation with the amount of graciousness and compassion needed to manage such a delicate matter. I am cringing. On the other hand, it’s equally terrifying to imagine yourself manually tracking every client’s life events, upcoming milestones, number of children, and dogs’ names on a master excel sheet. However, when we work with technology and not against it, beautiful things happen, allowing advisors to offer excellent service without losing that personal touch.
That is why 2022 will not be the year that robos will finally run human advisors out of a job. Next year won’t be the year either. The technology that will win in 2022, however, will do two things. It will deliver valuable and unique insights to advisors that go far beyond “clean data”; it will do so while enabling advisors to strengthen their client relationships and to grow and retain their client base. Teamwork for the win.
Chris Zuczek is chief product officer at Skience.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.