Why it’s time for advisors to ditch the ‘robo versus traditional’ mindset
With Canada’s banks making significant investments in fintech and robo-advisors’ assets under management continuing to grow at a rapid pace, traditional advisors are under pressure to adapt their processes. The reductive perception that fintech is creating a robo versus traditional situation misses the point completely. Top advisors are realizing that the best solution is, in fact, robo plus traditional.
“Embracing technology is not even going to be a choice for advisors anymore,” says Mansi Singhal, co-founder of online advisory firm Qplum. “Having the ability to access real time information about their investments is going to be something that most clients demand, if they’re not demanding it already. If, on an intraday basis, a client can see how their portfolio is doing and what trades are happening that gives a sense of comfort. It’s a much more transparent service rather than just sending out a monthly statement.”
Services like tax loss harvesting, risk management and asset reallocation have all been optimized by technology. “It will be very hard for traditional advisors to compete unless they embrace technology because they will not be able to offer these enhanced services at a competitive price,” Singhal says. “The only way you can bring costs down is by using technology.”
With new robo services entering the market on a weekly basis, clients have an unprecedented amount of advisory options to choose from. Although consumer choice is obviously a positive, Singhal does believe it has the potential to create confusion amongst clients who struggle to differentiate between the services on offer. “Something has to give, maybe things will evolve to a place where a hybrid model takes over,” Singhal says. “I think we’ll get to a place where it’s recognized that technology can’t just replace advisors, you need an advisor to go with the technology.”
The concept of robo-advice was badly received by the industry when it was first introduced, but many advisors are now realizing how utilizing fintech tools can actually help improve their practice, not render them obsolete. “It’s really nothing more than a tool for advisors and, as a service provider, if technology can help you to be thorough, efficient, and transparent, there is really no reason not to embrace it,” Singhal says. “Advisors will have to fall in line with the trends sooner or later. Luckily, there are enough services out there to help them become part of the trend.”
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