Lessons advisers can learn from robo-advisers

It seems like there are new articles covering robo-advice every day. Should you, as an adviser, be concerned? Will the robos eat your lunch?

Our view at AssetMark is that robo-advisers are driving great innovation for investors. And we believe if it is good for investors, it is good for all of us trying to serve investors. Advisers who are thoughtful and creative about this trend can learn from robo-advisers and apply some of their innovations to creating a better experience for our clients.

So what can we learn from robo-advisers, and how do you avoid losing clients to them? One key is to adopt new technologies that enable investors to see all of their investments in clear and easy-to-understand graphics on any device at any time. Advisers who successfully adapt can expect not only to keep current clients, but to attract the next generation of investors who expect immediate access to everything in an easy to understand display.

Clients today are technologically savvy, and they expect the same from their advisers. They shop online, communicate by email and text, and use a wide variety of apps on a daily basis. And they want their financial providers to give them the same kinds of customer service, both digital and live, as they get from Amazon or L.L. Bean.

(Related read: Robo-advisers want to plan your clients’ futures)

The simple fact is that the advisory profession wouldn’t exist as it does today were it not for advances in technology. Advisers today can serve a larger client base more efficiently than ever before. They can provide customized reports that previously took weeks to prepare and deliver them in formats that best suit their clients’ needs — in a matter of minutes.

By taking advantage of mobile applications, they can easily give clients visually compelling presentations on the status of their portfolios, share financial planning scenarios and access their entire back office from virtually any location.

And while technology isn’t the answer to every problem, there are certain functions that can be performed faster and better by software than they ever will be by human beings. But, let’s be very clear — delivering personalized advice isn’t one of them. People turn to their trusted advisers for obvious reasons: they have complex problems and need the help and support of professionals who can take the time to truly understand them.

A digital advice platform can only process the data it has been given. It can’t interpret the nuances of conversation and body language or press for more information the way a human can. A robo-adviser certainly cannot replicate the personal relationship that develops over time between two people with a shared history.

(More insight: Reality of the robo invasion isn’t what advisers think)

That is not to say that robo-advice is bad. On the contrary, for many clients with less complex needs and no desire to work with a planner, robo-advice can be extremely helpful.

For most investors, interacting with a professional yields better outcomes. The best and most successful advisers are those who have developed a deep understanding of a client’s emotions and life goals. Portfolio construction and asset management are only a starting point.

Advisers who focus on the client’s long-term goals and on developing a long-term personalized financial (and life) plan add incredible value. All advisers should assess how they can rise to this bar if they are not already there.

Even advisers who are the best “people persons” need to adapt to the latest technology advances. In fact, it could mean the difference between success and failure.
Research done by Fidelity Investments found that while online financial tools weren’t that important to investors over 60 (25%), they are extremely important to investors under 40 (62%) or who have less than $1 million in liquid assets.

So will the robos eat your lunch? They will if your value proposition is portfolio construction. If, however, you add value by building enduring relationships based on deep financial and life planning, and adopt great technology so that you can deliver beautiful graphics on demand, on any device, you will have plenty of lunch to eat, too.

Charles Goldman is president and CEO of AssetMark, Inc., an independent strategic provider of innovative investment and consulting solutions serving financial advisers.