Lately it seems like digital advice is synonymous with robo-advisors, but Jill Jacques, vice president at North Highland, says advisors who use automated advice tools need to make them one part of their tool kit.
“I see automated advice as one part of a bigger digital shift in our industry,” she told ThinkAdvisor. “It’s not a magic bullet for all clients, and it’s not the only digital solution that advisors should be thinking about.”
Advisors and firms that are thinking about incorporating robo-advice in their practice, or who have already done so, should also think about what other digital tools they can use to gain more efficiencies and improve engagement with clients. “Digital solutions in general can replace manual processes such as portfolio management, updating client information or transferring assets, freeing up the time to spend in more value-added areas that clients are willing to pay for, [those] being relationship management and coaching,” Jacques said.
For example, advisors should think about how they can “drive a more comfortable conversation” with clients, Jacques suggested. That might include “leveraging an interactive tablet app in a client meeting to work through scenarios and options versus looking at a screen or paper with a static point in time.”
The rapid rise of digital advice might put some advisors on the defensive as they struggle to find ways to compete against it or use it to their advantage. A survey by Jefferson National of RIAs and broker-dealers found that only 19% of advisors are using a robo-tool or digital offering in their firm, and 10% said they had never heard of a robo-advisor.
“I remember last year around this time nobody was talking about robo-advisors at all. We were talking with our clients, our wealth management firm and our retirement firm clients, about robo-advice and they thought, ‘What is that? Is that like robo-signing?’” Jacques remembered.
She said a big turnaround happened in spring this year when at the SIFMA Private Client conference in April, “robo-advice was talked about in every single discussion, every single breakout and there were still some firms and people thinking, ‘This isn’t going to last. It’s not a competitor for us, advisors don’t need to worry about it.’