Danger, Will Robinson! Will robots take over the financial advice industry?

MarketCounsel panelists agree that in the future, human advice will be integrated with digital platforms and technology to improve financial planning

Dec 8, 2015 @ 3:42 pm

By Jeff Benjamin

The future of the financial advice industry will inevitably involve a lot of technology, but robo-advice platforms will not replace the human touch of a good adviser.

That was among the top themes on Tuesday in Miami at the kick-off of the MarketCounsel Summit, an event catering to independent financial advisers.

“Robos are a lot of noise, and it's not the end of (human) financial advice,” said Bill Crager, president of Envestnet.

Mr. Crager, who blamed the media for making too much of the robo-advice revolution, added that he sees a future that integrates human advisers with digital platforms and technology to improve financial planning.

“Data will be key to the integration of human and digital advice,” he said. “We used to dictate to consumers how they would receive a good or service, and now they are dictating that to us.”

Sanjiv Mirchandani, president of clearing and custody at Fidelity Investments, described robo-advice as being “very much mainstream,” but still “way more than just robo-advice.”

(More: Practice Makeover: To be or not to be a robo-advisory practice)

“All of your customers will being demanding a digital interface from you, but you have to balance the digital side with the human interface in order to provide value,” he added.


“We think there's a new world coming around financial planning,” he said, adding that part of that new world includes an expected gap of about 10,000 financial advisers by the year 2020.

But in addition to the adviser gap, Mr. Mirchandani warned of a productivity gap, where digital resources can lend a hand.

“It's about being client centric, working in teams, being fee-based or fee-only, outsourcing asset management, and maximizing technology,” he said.

Kevin Keller, chief executive of the Certified Financial Planner Board of Standards Inc., also acknowledged the fast-evolving impact of robo-advice platforms, in addition to the challenge related to the swelling list of advice designations.


“The public can't tell the difference between a registered rep, a financial planner or a financial adviser,” he said, calling the general trend toward more titles “Twinkie designations that have little nutritional value.”

In terms of the movement toward digital platforms and services, he added that “consumers want holistic advice, and financial planning can be a differentiator to helping you provide value to your clients.”

(More: Which adviser designations yield the highest pay?)

Adding diversity to the financial advice industry is among the bigger challenges, especially as overall industry demographics are shifting, Mr. Keller said.

Addressing a room full of mostly white male conference attendees, he said, “It looks like a [Donald] Trump rally, with better-dressed people.”

“Right now we have more CFP professionals over age 70 than under age 30,” he said, but added that for the first time, the median age of CFP holders has fallen below 50.


Will robots take over the financial advice industry?

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