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Technology > Marketing Technology

The Robo Threat Is Here to Stay. Are You?

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The financial planning industry has found itself under fire once again. Same song, different verse. However, while the enemy is new, the battlefield is not.  Over the years, financial advisors have been attacked by no-load mutual funds, discount brokerage houses and day traders, all of whom are trying to replace the client’s need to interact with advisors.  This time, the threat is robo-advisors. 

Once again, in order to survive, financial advisors will need to reinvent themselves.  To do this, it is critical that advisors stay agile and change their value proposition to remain competitive and relevant.

New Value Proposition: Helping Clients Change Behavior

Prior to the robo-advisor threat, human advisors could add value by simply building solid, asset allocation portfolios. Now, human advisors must go well beyond portfolio construction and trading alone.

In order to compete against robos, the value proposition must be refined to focus back on the human interaction and relationship. Advisors who focus on helping their clients change behavior will not only survive, but also thrive. Having difficult discussions about saving and spending habits, as well as the need to work longer while investing at the appropriate risk level, will have huge impacts on the client’s ability to reach his or her financial objectives.  These hard-hitting discussions can only be done human to human. Advisors who refine their value proposition to one of helping clients change their behavior are the most likely to survive.

Adopting Technology

Adopting technology is the second adjustment advisors will need to make in order to combat the threat of robos.  A recent advisor survey we conducted showed that 96.7% of respondents believe that humans and robos can coexist.  The question remains, can an advisor not only coexist with robo-like technologies, but also use them to enhancing the overall client experience without replacing the need for humans? 

Many advisors believe that clients do business with them because of their strong interpersonal relationship.  However, while a strong relationship helps, it is no longer enough for investors who are looking for a holistic advising experience. Rather than steering clients away from robos or services like, the advisor who is going to outlive the robo threat needs to embrace the advancements our industry is making through technology.  An improved, more efficient client experience paired with a strong personal relationship will not only solidify current client relationships, but also increase referrals. 

The robo threat is here; but, advisors today must view it as an opportunity instead of a threat.  If they are willing to help clients change their behavior and improve the overall client experience in order to remain relevant, our belief is that they will thrive and survive in today’s changing landscape. 

The real question is not robo vs. advisor.  The real question is: What will be the next threat for advisors after robo, and how will they embrace it?


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