©2019 by InterGen Data, Inc.

Digital Advice is Here to Stay. What Can You Do to Remain Relevant

August 15, 2017

 

Today, a large component of financial advisory can be automated.  Computers can go through volumes of data - income statements and the like - and provide you with a comprehensive investment blueprint very quickly.

 

The same holds increasingly true for risk profiling and needs analysis.  Robo-Advisors can respond instantly to questions and give real-time feedback, replacing hours of lengthy questioning to figure out who and what your goals are.

 

Robo-Advisory or Digital Advice is steadily gaining ground in financial planning and wealth management.  Some of the world's largest banks and financial firms including UBS and Citibank, are investing heavily in it.  In fact, JPMorgan is reported to have invested $600 million dollars in finch - a large part of which is believed to be earmarked to build their digital capabilities.

 

What has occasioned this unlikely shift unreadiness for technology-enabled advice in an area of life as intimate and personal as wealth?

 

A couple of developments: The consumerization of IT for one.  The reality of mobility allows consumer access to data anytime, anywhere - and consumers expect this transparency across the board.

 

The expected retirement of up to 70 percent of baby boomer advisors over the coming decade, as well as the largest ever projected transference of wealth, is also contributing to this trend, estimated to be about $30 Trillion.  Firms are preparing for this dramatic change in such a short span of time by embracing automation and prioritizing the provision of technology-led rather than people-led services.

 

In such a changed scenario what role can wealth managers and advisors play to remain distinct and relevant?

 

For starters, relationships will become crucial for advisors.  The world's smartest Robo-Advisors are not capable of following the nuances of life changes attached to big financial decisions, and advisors will be expected to help 'take stock' in times of distress or financial gain.

 

Second, advisors must sharpen their ability to offer validation and personalized service.  As more clients adopt a 'do-it-yourself' model of investment, it will become imperative for financial advisors to offer concierge-like input that help validate on-the-go investment choices and ensure clients are fully informed of the outcome of their decisions.  To do this well, they must consciously 'let go' of the role they have played so far by moving away from non-specialized tasks to the more critical pieces that are unique to each client.  

 

Fourth, they must actively cultivate an openness to collaborate with other advisors and digital services or both.  This will ensure that clients receive a comprehensive, up-to-date, accurate and accessible counsel that is highly customized to their distinct financial goals and needs.

 

The change is easier sad than done.  However, to remain relevant and thrive, advisors will have to embrace new ways of learning based on challenging what they have been taught and distinguish themselves by mastering qualities that the most advanced Robo-Advisors can never have.

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