High net worth investors need and want human advice backed by technology for better recommendations, reporting and access, says InvestEdge
The future of investment advice isn’t a battle of man versus machine, according to a commentary from InvestEdge.
The investment industry is excited – and fearful – about the rise of “robo-advisors”, systems that give automated investment advice. Robo-advisors offer investors lower costs and minimums, and some worry they will wipe out traditional “human” investment guidance.
But savvy advisors can meet the “robo-advisor” challenge by becoming “bionic advisors” – skilled investment counsellors who use decision-support software, automated reporting systems and “always on” access through portals and mobile devices to guide their clients, especially high net worth individuals and others with complex needs.
That’s the viewpoint of InvestEdge, a leading national provider of wealth management, data analysis and reporting solutions for the investment industry. In a new commentary, Concerned About the Robo-Advisor Threat? Become a Bionic Advisor, the firm describes the advantages of the bionic advisor approach and lays out a roadmap for blending traditional advice and technology.
“Robo-advisors are here, and they are increasingly sophisticated. But the better answer is to blend technology and human advice,” says Brian Burns, President of InvestEdge.
“Technology can help, but the advisor will always be front and center – especially for high net worth individuals and those that aspire to be. Investors, especially those with large and complex portfolios, want and need the kind of guidance that only a skilled, experienced advisor can give. To support them, advisors will make use of technology to add value and strengthen relationships. That’s what a ‘bionic advisor’ does.”
Clients want human advice
According to the commentary, investors’ attachments to human advice are not going away:
- Clients are becoming more, not less reliant on advisors.
- Investors want what advisors provide – calm, up-to-date insights and a long-term approach.
- Advisors are concerned about robo-advisors, but they look to technology to become more competitive.
Becoming bionic means knowing your strengths and choosing the right tools
“The first step in becoming a bionic advisor is to decide how your current service and delivery model will change,” Burns says. “Then choose the right tools on the technology side of the equation.”
- Know what technology does well.
- Know what only a skilled, experienced advisor can provide.
- Choose the right technology platform.
- Choose the right tools.
The goal of the bionic approach: Better client relationships and business success
According to Burns, becoming a bionic advisor makes business sense. “Becoming a bionic advisor can increase your value to investors, making you and your firm more successful. Some advisors and firms fear that technology will complicate their work, or make it harder for them to stand out from the pack.
“But, in fact, technology can simplify work by liberating advisors from routine tasks such as having to manually produce quarterly reports. That means they can focus on what they do best – providing high-touch support and far-reaching, long-term strategic advice. And technology can help the firm stand out – improving the quality of advice while extending its brand ‘reach’, allowing it to connect with clients wherever and whenever they need.
“There’s no question that technology is transforming the investment industry,” he continues. “Robo-advisors have their place – for small, young, early-stage investors and others that do not want professional guidance or human interaction. But current and aspiring high net worth individuals still need the guidance that only human advisors can provide.”
Therefore, “to robo- or not to robo?” is not the question. The question instead is how to harness technology to the highest benefit of the investor, the advisor and the firm.
“Becoming a bionic advisor is the best of both worlds – and in a world of rapid change, disrupted economics and distribution models, it’s the clearest path to becoming, or remaining, the person high net worth investors turn to for strategic advice, no matter where their assets are held,” Mr Burns says.