Human-provided financial advice isn’t going anywhere. Even as artificial intelligence and automated, algorithmic investment management have captured the public imagination, human financial advisors continue to provide investors with high-quality guidance and increase the likelihood that their clients will achieve the financial goals most important in their lives.
While technological improvements across the wealth management industry have benefited both advisors and their clients, there are serious shortcomings that accompany pure “robo advice.”
Naturally, algorithms and software developers don’t provide the same human connection found in client-advisor relationships. Robos also struggle to navigate complex financial situations, are incapable of explaining nuanced planning and tax scenarios and can’t provide the periodic reassurance clients crave from their financial advisor.
Robo drawbacks: gaps in plans and frustrating communication
While automation and algorithmic financial advice can help clients with certain aspects of their wealth management, it’s far from a perfect solution. Pure robo advice doesn’t account for the twists and turns that arise throughout life, and one-size-fits-all software struggles to address the subtleties and details that factor into each individual’s financial journey. Meanwhile, human advisors are experts at bringing financial planning to life, enabling clients to explore wide-ranging financial scenarios and the possibilities ahead of them.
Algorithms also fail to provide the transparency and control investors want. Investors don’t need cookie-cutter solutions; they want tailored investment plans and a variety of investment options, so that they can achieve their financial objectives. Robos tend to operate in a black box, leaving clients scratching their heads wondering why and when tax-loss harvesting might take place, for example, or how certain economic conditions will affect their portfolio.
To make matters worse, communication by robo advisors is often reduced to a list of FAQs and forums, rather than a respectful dialogue between advisor and client. Even as some clients are starting their investing journey at a robo advisor, a recent Vanguard report noted that 88% of investors working with robo advisors are considering a transition to human-provided financial advice in the future.
Money is an emotional topic. Robos just don’t provide the peace of mind that human advisors intuitively extend to their clients.
Human-centric advice continues to shine
We believe tech-enabled financial advice is—and always will be—the best method for providing top-tier guidance and investment management.
Decades of lifestyle studies associate human-to-human connection with higher levels of personal well-being and resilience, and a greater likelihood of achieving goals. As the wealth management industry increasingly focuses on financial wellness, leading advisors can borrow lessons from lifestyle medicine, which notes that the sustainability of healthy habits is critically linked with human-centric support.
Human advisors do so much more than just investing. The best financial planners can anticipate situations requiring careful guidance and encouragement. They know how to succeed in the face of life’s challenges, like a job loss, deteriorating market conditions, a divorce or the sudden death or illness of a loved one. Unlike a robo advisor, human advisors know how to empathize.
Tech-enabled human advisors are best equipped for the future
At intelliflo, we’re not anti-technology. In fact, we believe that software-generated investment advice paired with the experience of a human advisor offers the best, most powerful and effective means for providing financial guidance.
In the past, scaling human advice was difficult. But that’s changing. Our power users have 28% more clients per advisor and 48% more assets under administration per advisor than other advisors. We call them “Champions,” because they’re dominating today’s wealth management landscape.
Equipped with the right tools and models, advisors can help their clients successfully navigate the fluidity of life over the long term, bolstering the advisor-client relationship. That’s the power of advice that never sleeps; it creates transparency and surfaces data that can alert advisors to opportunities to improve the manner in which they serve clients. It also lays the foundation for a deep and resilient advisor-client connection, making it easier for clients to follow their financial plan and stay disciplined in the face of periodic uncertainty.
While robo advice may be today’s flash in the pan, the advantages of human-centric financial advice persistently outshine algorithmic offerings. Schedule a demo to learn how intelliflo’s suite of advisory solutions can give you the tools you need to continue doing what you do best: serving your clients and helping them achieve their goals.