Financial planners should be embracing robo advice technology as a component part of maintaining relationships with multiple generations of clients, according to new US-based research.
The research, published by State Street Global Advisers, argues that embracing robo advice technology does not mean replacing human advisers. It also points to the US experience of robo advice having most penetration among clients with accounts below $100,000.
It said that combining the human touch of an experienced financial adviser with the logic, fee transparency, methodology and accessibility offered by a robo-advisor platform could be a powerful combination for an adviser’s practice model.
The State Street research said the rapid rise of robo-advisors was just one piece of a larger trend that is reshaping the advisory industry, driven in large part by an ongoing generational shift.
“The overriding challenge for advisors today is that they often need to meet the distinct needs of two different types of clients,” it said. “Older clients are increasingly focused on retirement solutions and the best way to pass their legacy on to the next generation. Meanwhile, that next generation is looking for “adaption and innovation” from its advisers, including access to the latest technology, innovative products and client-customised solutions.”
The State Street analysis said that, last year, the company’s Center for Applied Research asked investors: “In the future, do you think that technological advances in providing financial advice will better serve individuals with regard to value and cost than financial advisors?”
It said that the question had elicited that more than three-fourths (76 per cent) of Millennials respondents checked “yes,” and that even a slim majority of boomers (54 per cent) took the same view with Gen X respondents coming in right between the two, with 67 per cent agreeing with the idea.
