Robo-advice, or the process by which investment solutions are produced through algorithms, has split the adviser community for years now. Human vs. robo has formed the basis of hundreds of debates about the future of advice, with advisers quite rightfully lamenting the death of the human touch. But embracing technology is not an all or nothing choice with a gaping chasm between, because there is a third way – the hybrid approach.
For most advisers and paraplanners, the amount of work needed to complete a clients’ investment plan can sometimes be overwhelming. Being a financial planner seems to entail countless hours, days or even weeks, surrounded by paperwork and very little time to take proper care of each and every clients’ relationship — not to mention the time needed to find more clients and build their brand or business.
Your job as a financial planner goes beyond managing investment portfolios or closing new clients. Marketing, customer service, administration, compliance and education are a crucial part of any adviser’s routine. It can feel impossible to keep on top of it all.
Repetitive tasks should be automated
This is hard to take when studies show that much of an adviser’s time can be spent on logic-based, simple and repetitive tasks which can, and should, be replaced by automated solutions. In fact, in Capgemini’s latest take on the industry, innovation, task automation and hybrid solutions are trends that will set financial advice firms apart from each other. In its Top 10 Trends in Wealth Management for 2018, Capgemini points out how automation can help firms decrease by 60% the time they spend on completing repetitive tasks.
Recent studies have concluded that automation lowers operational costs and response time; allows firms to focus on holistic advice and value-add activities; reinforces their competitive advantage; and quickens client onboarding. Plus, it improves the overall satisfaction of clients, financial planners and other staff.
Meet the expectations of younger generations
Innovation is also relevant when improving margins. Most firms have non-differentiated offerings and suffer from cost pressures and reduced profit margins if they stay away from the technological wave. Adding to that are robo-advisers who have changed the industry by offering solutions with broader digital abilities, which are very attractive to many investment-seeking individuals. It is clear that whether robo makes up part of your plans or not, firms do need to innovate to keep their heads above water. There are plenty of new technologies for firms to do just that, while keeping client relationships human and face-to-face.
Clever technology will also help in attracting young high net-worth investors who demand firms to have more and better digital capabilities. As younger generations become more financially savvy, there is no doubt that technology will have to be a standard part of any solution firms may give them. Who has the time or willingness to go over massive piles of paper?
When Advicefront set out to deliver a hybrid solution for financial advisers, our aim was to embrace the wonders technology provides but still keep in mind that, regardless of it, the human element will remain as the key differentiator. We were never robo-advice nor are we planning to be in the near future. On the contrary, it’s precisely because we feel that people should have more time to connect with each other, emotionally — both face-to-face and digitally —, that we’ve introduced technology into our solutions.
Technology is nothing but an extension of an adviser’s work
Although robo-advisers can be very convenient solutions to some investors, they lack the warmth, trust and confidence that only a human face can give. Combining client self-service with financial planner-led advice results in lower cost to income ratio, fewer errors and it leverages technology to assist in traditional manually intensive tasks, thus making way for higher client conversions. For us at Advicefront, technology is nothing but an extension of the work of the financial adviser. Rather than being a substitute, like most robo-advisers are, our hybrid model expands from the importance of keeping things human, adding technology to it, and not the other way around.
With a hybrid approach, advisers can refocus their meetings to something far more productive and holistic, engaging (hopefully) in very pleasant conversations about clients’ lives and shared interests. In this way, technology should be seen as an adviser’s ally, not an adversary.