Page 3 - Investment Advisor April/May 2022
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                 No, Your Client Won’t Ditch You for a Robot: Survey

                 Are technology and digital advice a threat                            Twenty-nine percent of surveyed advi-
                 to human financial advisors? To find out,                           sors reported that estate and trust plan-
                 Vanguard in July surveyed 1,518 U.S. inves-                         ning was one of the top two financial
                 tors with at least $100,000 in investable                           matters their clients were planning for or
                 assets who reported having a human advi-                            considering. Nine in 10 advisors said their
                 sor, using a digital service or both. They                          clients were proactive, and half said they
                 also conducted qualitative interviews with                          were highly proactive in managing their
                 25 investors and 15 advisors to under-                              estate and trust planning goals.
                 stand how and why investors choose                                    Forrester Consulting conducted a
                 human versus digital advice services and   achieving their financial goals thanks to   survey of 221 U.S. financial advisors in
                 the tasks that define each service model.  their financial advisors, versus $50,000   November to gain insights into trust/
                   The research showed that study partici-  closer for digital-advised clients.  estate planning for HNW clients.
                 pants believe advice provides higher incre-  Digital advice holds its own in one   According to the study, outdated tech-
                 mental portfolio value than going it alone,   regard. The study found that across all   nologies impede customer experiences
                 regardless of delivery method, but digital   generations, wealth levels and advice-  and do not keep up with their estate/trust
                 services do not threaten an advisor’s   delivery types, clients think that human   planning expectations. Not only that, 66%
                 book of business. Ninety-three percent of   advisors should consider automation to   of advisors still use paper-based documen-
                 human-advised clients said they would   outsource portfolio construction and func-  tation that software cannot process yet.
                 use a human advisor in the future, where-  tional tasks, such as account setup and   Thirty-seven percent of advisors said
                 as 88% of robo-advised clients said they   consistent monitoring. This is good news   technologies that are outdated or miss-
                 would consider switching to a human.  for advisors, according to the researchers,   ing key functionalities are one of the top
                   The study quantified the value that   because it will allow them to scale tech-  three hurdles that prevent them from bet-
                 investors perceive in human and digital   nology to their entire client base. They can   ter managing their clients’ financial plans.
                 advice services across a three-pillar   then focus on delivering uniquely human   Thirty-six percent also said technologies
                 framework of portfolio, financial and   skills that help clients achieve financial   can be cumbersome and difficult to learn.
                 emotional outcomes. They found that   success and provide peace of mind.   Another barrier is that clients hesitate
                 human agents excel in all dimensions.  The study concluded human advisors   to disclose private information, accord-
                   Investors’ perceived value-add to annu-  should leverage both automation and   ing to a third of advisors — implying that
                 al performance was 5% for human advice   upskilling about emotional needs of cli-  trust is an issue and that clients need to
                 and 3% for digital-only advice. Human   ents to optimize their value, scale their   feel a certain level of control, according
                 advisors also provided three times the   practice and target the unmet needs of   to the study. Similarly, 32% said market
                 emotional support, compared with self-  investors who are robo-advised and who   conditions and financial uncertainty leave
                 management of investments.        would be willing to switch their business   clients concerned, which further adds
                   Both human- and digital-advised cli-  in the future.              strain to their financial planning needs.
                 ents believe that their advisors add sub-                             Advisors know they need to keep pace
                 stantial financial value in helping them   Estate and Trust Planning Tools Needed   with client demands and needs around
                 achieve their financial goals. To convert   as Demand Surges: Survey  estate and trust planning, according to
                 perceived financial value to dollar terms,   Estate and trust planning are top of   the study. Asked what types of financial
                 the researchers used $1 million as the   mind for high-net-worth clients, accord-  planning tools they lack or do not have
                                                                                     enough of, they specified several. One,
                                                   ing to a new study from Envestnet
                 median financial goal of both human-
             Adobe Stock  advised and digital-advised clients. They   MoneyGuide. The study also found that   smarter technologies. Two, personalized
                 found that human-advised clients per-
                                                   advisors need more efficient processes
                                                                                     tools. Three, more interactivity and col-
                                                                                     laboration. — Michael S. Fischer
                                                   to satisfy their demand.
                 ceived themselves as $160,000 closer to
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                                                                                       APRIL/MAY 2022 INVESTMENT ADVISOR 1
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