The message from a leading financial advisory industry group is stark: The rise of the machine advisor is unstoppable now and traditional advisors are in its path.
"The most significant finding is how our members are really divided about how robo advice and online algorithms are going to affect the business," Walters says. "Some members think that it will affect other advisors’ business, but not their own."
Walters' advice for those in the human resistance: get a skills upgrade.
"As an advisor, if I am the product, how do I invest in the quality of the product?" Walters asks. "I have to enhance my skills and capabilities by pursuing advanced certifications and professional development."
There are those advisors who see robos as tools rather than adversaries, Walters notes.
Roughly 40% of surveyed
And then there are the advisors who feel they are protected because, in their opinion, robos aren't going to be able to take their clientele.
Almost 14% of
Two trends that Walters believes will accelerate as a result of automated investment technology: advisors placing greater focus on upscale clients and increased scrutiny on fees and the amount of value an advisor adds in the context of the cost of advice.
The recent launch of Charles Schwab Intelligent Portfolios is one prominent example of an established firm making a serious play to tap into the broader appeal of robo advisors.
Being picky is a strategy that will likely become common.
"More advisors are going to have to be more selective about who they are going to serve and with what products," Walters says. "Rather than one financial planner supporting 200 clients, maybe an advisory firm has two or three advisors coming together and using technology to support the clients that don’t need the same level of human advice as high-net-worth investors do.
"Especially with the rise of new technology, many investors are going to ask ‘What am I going to be paying my advisor a fee for?’" he said. "There is a value expectation, as a lot of robo advisors are built around low-cost investment products such as ETFs."
|Copyright:||(c) 2015 Financial Planning. All rights Reserved.|
|Source:||Source Media, Inc.|