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

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 01, 2015
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. NEW WORLD COMING “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. 'TWINKIE' 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.

Latest News

Want to get the most out of alts? You’ll have to do your homework
Want to get the most out of alts? You’ll have to do your homework

Advisors who expect an edge from alternatives' illiquidity premium – without understanding the underlying terms and explaining them to clients – have a world of learning to do.

'Finfluencer' Ponzi scheme defrauds investors of over $20M
'Finfluencer' Ponzi scheme defrauds investors of over $20M

The social influencer Tyler Bossetti pleaded guilty to wire fraud and aiding in the filing of false tax documents as a result of the real estate scheme, which ran from 2019 to 2023 and used platforms including Facebook and YouTube.

US annuity sales see sixth straight $100B+ quarter
US annuity sales see sixth straight $100B+ quarter

The latest LIMRA data release shows continued growth in RILAs, variable annuities, and FRD products, though researchers argue more education is still needed.

RIA moves: Thiel's Indivisible welcomes Ride Wealth Partners, $4B Beacon snaps up Astor
RIA moves: Thiel's Indivisible welcomes Ride Wealth Partners, $4B Beacon snaps up Astor

Indivisible Partners builds on its strategy to take turf in the independent space with its latest move in Colorado.

Advisor moves: LPL adds $425M Evermark Investment Partners, $300M Merril Lynch group hops to Ameriprise
Advisor moves: LPL adds $425M Evermark Investment Partners, $300M Merril Lynch group hops to Ameriprise

LPL's latest addition, a San Diego team defecting from RBC, represents a milestone for the broker-dealer giant's Strategic Wealth model for wirehouse breakaways.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave