Man versus machine

I joined a gym last week. Normally, I wouldn’t make a big deal out of it — much less start a column about it. But no sooner did I get back home after paying for my first month’s membership ($125) and the initiation fee ($125) with my credit card, I received an e-mail from mint.com. The website that helps me keep track of my spending let me know I had exceeded my annual budget for health and fitness by $250. The e-mail prompted me to update my budget, and that, in turn, left me regretting the fact that I had chosen to pay for my membership on a monthly basis as opposed to paying for the full year upfront — which would have been significantly cheaper.

Welcome to the future of financial advice.

Our cover story this week looks at the role technology will play in delivering financial advice over the next 10 to 20 years. While I firmly believe that clients will continue to seek — and pay for — financial advice, the kind of advice that advisers dispense will likely be markedly different than it is today. As InvestmentNews reporter Liz Skinner found out in putting this piece together, the day will soon come when advisers no longer will be drafting financial plans and making specific investment recommendations.

Instead, they will be focused on helping clients avoid mistakes that come with — well, being human.

The financial adviser of the future will be responsible for pointing out to clients when they are being overconfident about reaching retirement goals or when they are making investment decisions based on wishful thinking rather than actual facts.

So advisers should embrace — not fear — the changing technological landscape. Let robo-advisers handle, in the words of adviser Tim Shanahan, “the math.” Focus on helping your clients set reasonable goals and expectations. Check in with them when the markets are going haywire and, if necessary, override the robo-advisers’ recommendations if it means putting your clients’ minds at ease.

While the day may soon come when a robo-adviser will help clients buy insurance or develop an estate plan, it’s a long way off from when robo-advisers will be watching their clients’ children get married (and helping the clients figure out how to pay for the wedding!). Also, I pity the robo-adviser that tries to tell me I’m not getting my money’s worth out of my gym membership.