There have been lots of reports in recent months about the supposed threat posed by robo advisors to human financial planners. However, it seems that advisors are not shaken – in fact they believe that robo advisors could ultimately enhance their business.
According to a survey of 800 attendees at a True Potential conference, 80 per cent of planners deemed that robo advice actually represented an opportunity for the business rather than a problem. They predict that clients will opt for a hybrid model rather than turning their backs on human advisors, and Melissa Harrell, associate advisor at Howe Harrell & Associates agrees.
“Robo-advisors are a tool for investors, not a complete replacement for receiving full financial advice,” she said.
“If there are investors out there who are financially savvy enough to use these tools to their advantage then this would be a good fit. It takes time and commitment to properly manage a portfolio, create and maintain financial plans, and stay up-to-date on financial matters: studies in Canada show that clients save significantly more money, and have much more confidence in their financial plan when a human advisor is engaged.”
Senior partner at True Potential, Daniel Harrison, described reports of robo advisors replacing humans as “overblown”. Indeed he believes that clients want the best of both worlds and it’s up to advisors to try and bridge the gap with technology.
“In order for robo-advisors to be a threat to our occupation they would have to be able to consider a client’s full financial situation - including tax implications, and build trust,” continued Harrell.
“Our clients appreciate that we treat their money like our money. They can sit down with us to have a conversation face-to-face, looking us in the eyes, confirming they will have enough money to send their kids to school or retire on time. When an algorithm is created that can replace that kind of human interaction, then I think we are looking at a threat to our roles. Until that day, the more tools and technologies that are created to increase financial literacy are well supported by me.”