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Technology > Marketing Technology

Robo Technology's Promise Redux: It’s About the Clients, Stupid

By Bob Clark

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In my last blog (How Robo Technology Will Take Independent Advice to the Next Level), I concluded with the following: “Financial advisors, then, will become more like today’s doctors: analyzers of information that’s been collected by robo platforms, reviewers of recommendations provided by those platforms, and counselors helping clients to implement the appropriate recommendations. As [Exceed Investments’ CEO Joe] Halpern suggested: ‘the most valuable benefit of working with an advisor is the advisor’s knowledge of human behavior.’”  

In a thoughtful comment to that blog, financial advisor coach and founder and CEO of Belay Advisor, Steve Sanduski, called me out a bit on that conclusion, and rightly so.

“I’ve never been a fan of the doctor analogy for advisors. Think about it. You go to a doctor, get 10 minutes of face time with the doctor, then you get a bill for hundreds of dollars,” he wrote. “There’s really no relationship established with the doctor and I’m not inclined to give them referrals. If advisors use technology so they can see many more clients (like the doctor having a room full of patients waiting to see them) and only spend 10 minutes of face time with each of them, I think we’ll lose much of what makes the advisor/client relationship special.

“Yes, as you write, this might work for investors with $20,000 to invest, but for people with $500k or more who are paying $5,000 per year or more for ‘advice,’ I don’t see how it makes sense for the advisor to have 4 appointments per hour, hop from office to office, and have an army of assistants checking the client’s financial vitals.

“I hope our industry does not move toward a doctor model for high-net-worth clients. I’m all for using technology to automate the routine of data gathering, investing, rebalancing, etc., and for pulling out big data insights to help the advisor give better advice.

“Where I think the advisor adds great value is in the conversation about all the non-investment related advice (traditional financial planning, career planning, longevity planning, retirement coaching, health planning, life planning). I tell my coaching clients, ‘You’re definitely worth 1% per year of AUM, but it’s 30 bps for investing and 70 bps for everything else.

“The really hard part for advisors is how to articulate that 70 bps and make it tangible for the client to feel comfortable paying for it.”

Of course, Steve is absolutely right. Most advisors do need to spend more time with their clients, not less. In fact, based on my recent experiences, doctors need to spend more time with their clients, too.

The point that I apparently failed to articulate is that information that is increasingly gathered—and analyzed—by digital technology will help advisors to make the most of their client meetings. The tech will help yield greater insight into clients’ wants and needs, and facilitate more in-depth insight into how those wants and needs might best be met. 

In my July 13 blog about convincing clients that their advisor is on their side, “Trust: Being a Good Advisor Is About More Than Expertise and Information, Harvard-trained negotiation and mediation specialist Raphael Lapin put it this way:

“It’s not enough that the advisor know their clients’ needs; The client also has to know that you know and understand their needs, concerns, and risks. You need to demonstrate your understanding by explaining the client’s needs and checking for accuracy.

“As this information-development stage takes place, the client is becoming more assured that you understand them.” 

In my view, today’s digital technology will increasingly do much of the “leg work,” freeing financial advisors to spend more time on the kinds of conversations which create relationships that no digital program can match.

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