Robo providers moving to hybrid
Leading US robo-advice providers are now introducing “hybrid” automated models and bringing humans into their robo-advice equation, indicating the industry is still some way off from a fully automated financial advice model, according to Adviser Intelligence.
The financial software company’s chief executive, Jacqui Henderson wrote in a blog that the US’ third biggest robo-advice service, Betterment had introduced humans into its advice service for investors with balances over $100,000. Investors would receive phone calls and account monitoring services from certified financial planners. The country’s second largest provider, Schwab had also combined automated advice with human advisers for clients with at least $25,000 to invest.
“The fact is, humans are needed to round out the financial advice process, and increasingly ‘robo-advisers’ are becoming ‘hybrids’ by introducing people to round out their financial planning service,” Henderson wrote.
Robos could not reproduce the quantum mechanics and dynamics of the human brain, which was constantly evolving. This meant outcomes would also keep changing as humans gained knowledge.
“In contrast, ‘robo-advice’ is limited by computer programs that follow predetermined rules and deliver pre-defined outcomes. A ‘robo-adviser’ reduces investing to a formula,” Henderson wrote.
True automated advice could not exist until algorithms could dynamically sequence and imitate human behaviour and decision-making in response to life events, and automated advice could not yet deliver holistic advice.
Henderson acknowledged the role of computers and automation in designing financial modelling and simulations using statistical methodologies to model complex scenarios such as cashflow, debt, asset allocation, economic variables, and gauge client tolerance and capacity for risk.
But she said client goals were central to financial planning strategies to deliver outcomes the client wanted, and algorithms recommending investment asset allocations and products would not fulfil this.
“And here, a human is core to such discussions,” Henderson said, adding robos could not understand feeling and empathy.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has banned a Melbourne-based financial adviser for eight years over false and misleading statements regarding clients’ superannuation investments.
CFS has formed a strategic partnership with the University of Sydney to support the responsible development of AI solutions in the wealth management sector.
Increasing traction among high-net-worth advisers and a stabilisation in adviser exits have helped Praemium report quarterly net inflows of $667 million in the third quarter of 2025.
ETF provider VanEck has announced its intention to launch a uranium and energy solution as global political agendas point to expansion in this sector.
