The Robo Advisors Edition – Digital Well Podcast

July 24, 2014

There has been quite a bit of discussion about the emergence of automated financial planning and wealth management platforms (aka Robo Advisors). These includes platforms like Betterment, Wealthfront among several others.

I’ve been involved in discussions on social networks regarding this topic, along with a productive Q & A at a recent national conference I spoke at in June. Based on those conversations, I set out to put some additional thoughts down on this topic and hopefully continue the evolving conversation about where our industry is and could be headed in the digital age.

Specific to our industry, financial services has mirrored the earlier movement of manufacturing and to some extent retail (think Amazon and eBay) in finding workflows and output to commoditize to discover new paths to profitability, through automation and moving to paperless environments.

The automated financial planning and investing solutions really serve as a successful evolution of the decade-long push for efficient, integrated and scalable technology. That has been a particularly strong target for the independent segment of the industry going head to head with Wall Street and wirehouses.

As those technologies became fine tuned for our vertical, naturally business and technology thinkers began the hunt for ways to wholly automate certain functions of the advisor-client service relationship.

An aside, but also interesting to consider is the potential for those automated platforms to serve as training grounds for young, new investors. These are folks who traditionally did not have exposure to the guidance of financial advisors or the ability to cultivate financial disciplines. These platforms reaching out to the wider population of investors, supporting very small accounts and offering framework Financial planning tools means a slightly more educated set of investors. When their needs grow complex, where the advice of live financial counseling arises, advisors can step in where (for the time being) automated solutions cannot.

However, this does mean those who are not prepared to deliver services in as elegant and digital manner as these platforms do, may not win the opportunity to bring their human expertise to the fore. If these more educated and aware investors don’t find you compelling as they perform due diligence in their effort to graduate from an automated platform to live, professional advice, they’ll pass you by and find someone who appears ready for them.

A longread commentary ran on The DigitalFA – and I’ve also discussed it here on the latest episode of The Digital Well Podcast.

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