New data suggests the introduction of automated advice could actually bring advisors closer to meeting a key objective for all industry players
The arrival of the robo advisor isn’t the death knell so many in the full-service advisory business feared but rather a catalyst for growth, says one industry expert.
“Most households just do not have the fundamental understanding of financial topics that would allow them to feel comfortable making decisions solely by themselves,” states a recent report by analytics expert Cerulli Associates. “Cerulli believes that the increase in the availability of tools to help these investors explore their options will drive demand for personalized advice as investors gain a greater understanding of the vast number of inputs affecting their long-term outcomes.”
Interestingly, the firm, found that over the past four years there was a 10% increase in the number of people meeting regularly or intermittently with an advisor. Additionally, it found that the number of self-directed investors (those not using an investment professional) declined by 12 per cent over the same period.
“WebMD and Fitbit activity trackers were initially seen as threats to demand for medical and fitness professionals, but have instead resulted in more informed consumers interested in receiving expert advice to address the unique challenges they face,” the report states. “Improved platforms will allow better communication between advisors and investors on an ongoing basis. Examples include replacing some office visits with other options or allowing for planning sessions with shared control of tools and calculators to explore various scenarios.”
Cerulli concludes that full-service advisors will use technology to get closer to their best clients while providing those clients with fewer investable assets a digital investment service to keep them engaged until they qualify for full-service advice.
“Many assume that ongoing advances in technology will empower investors to handle their financial affairs without the assistance of traditional financial advisors,” the report states.
The Cerulli report suggests the industry should see it it quite differently.
“Most households just do not have the fundamental understanding of financial topics that would allow them to feel comfortable making decisions solely by themselves,” states a recent report by analytics expert Cerulli Associates. “Cerulli believes that the increase in the availability of tools to help these investors explore their options will drive demand for personalized advice as investors gain a greater understanding of the vast number of inputs affecting their long-term outcomes.”
Interestingly, the firm, found that over the past four years there was a 10% increase in the number of people meeting regularly or intermittently with an advisor. Additionally, it found that the number of self-directed investors (those not using an investment professional) declined by 12 per cent over the same period.
“WebMD and Fitbit activity trackers were initially seen as threats to demand for medical and fitness professionals, but have instead resulted in more informed consumers interested in receiving expert advice to address the unique challenges they face,” the report states. “Improved platforms will allow better communication between advisors and investors on an ongoing basis. Examples include replacing some office visits with other options or allowing for planning sessions with shared control of tools and calculators to explore various scenarios.”
Cerulli concludes that full-service advisors will use technology to get closer to their best clients while providing those clients with fewer investable assets a digital investment service to keep them engaged until they qualify for full-service advice.
“Many assume that ongoing advances in technology will empower investors to handle their financial affairs without the assistance of traditional financial advisors,” the report states.
The Cerulli report suggests the industry should see it it quite differently.
