Robo-advisors: Tools for personalized advice?

Robo-advisors: Tools for personalized advice?

Robo-advisors: Tools for personalized advice? As more people are starting to expect better financial advice, the robo-advisor revolution is unavoidable, says Jon Stein, CEO and founder of US robo-advisor company Betterment.

He was one of the presenters at the CFA Institute Annual Conference held in Montreal in May. With the theme Investing in a Changing World, the conference addressed major trends foreseen to affect the future of finance. Mr. Stein’s talk, The Future of Financial Advice, addressed how and why he foresees increased adoption of robo-advisor technology.

“In a survey, 83 per cent of those surveyed want more advice than what they are getting now. Everyone wants more advice about their investments and that advice is very expensive,” he said.

With people demanding more for their money, he predicts a great couple of decades ahead for both robo-advice and traditional advice. “The world is more and more complicated. We need more advice to help navigate this reasonably complex world,” he said.

And it’s not just quantity that’s important; quality is a key consideration too. Stein believes that the key to quality advice lies in the information that advisors can get about their customers.

“The more we know about you, the better advice we can give,” Stein said. “The best method isn’t to give people whole heaps of tools to figure out themselves. The right solution is to tell them the right things and ask them simple questions that they know the answers too.”

The challenge is to collect, organize, and incorporate massive amounts of client information into investment advice that is tailored and appropriate to specific clients’ needs. That challenge, Stein asserted, can be better met if humans work with robo-advisors.

“You’re going to be able to serve more customers than you ever have been before and you’ll be able to serve them better, because you’ll be able to have a more reliable process. You’ll be able to spend more time understanding their needs.”

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