What do the recent SEC robo guidelines mean for advisors?

New SEC guidance provides effective ways for advisors to comply with disclosure regulations

Kevin Cimring 001Robo-advisors continue to represent a fast-growing trend in the investment advice industry, changing the way firms engage with and service their clients. However, given the automated and online nature of their business models, there are unique considerations for robo-advisors when complying with traditional regulations.

Following collaboration with industry participants, the Securities and Exchange Commission’s (SEC) Division of Investment Management released a Guidance Update1 on February 23, which includes suggestions to help robo-advisors meet disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940 (IM Guidance Update No 2017-2).

The result of this collaborative approach is

Continue

Robo-advisors vs. human advisors: Which provides the services that people most want?

While robos can help simplify processes, human relationships are key to satisfaction, says one investment survey

Kevin Cimring; Kevin

At its core, investing is seen by many as a data-driven activity. So, it’s not surprising that so-called “robo-advisors” might be perceived as the next big thing in portfolio management, especially when the services are offered at a fraction of the price of a human advisor. But there’s a problem with that theory: Many investors highly value the care and concern that come from human financial advisors and simply aren’t willing to hand over their nest eggs to a “robot.”

The value of the human touch was reinforced by a 2016 Gallup survey.1 Participants were asked whether certain positive qualities were more applicable to robo-advisors or human advisors. Robo-advisors outranked human advisors in just one of those 10 qualities: charges lower fees (63% attributed this more to robo-advisors and 26% to human advisors). In second place was “simplifies the investing process for investors;” only about one in three investors associated that quality more with robo-advisors.

Continue

Will technology eventually replace human financial advisors?

While online tools are increasingly being adopted by investors, we believe people will continue to benefit from access to skilled advisors

roy_simonSo-called robo-advisors — services that provide automated investment recommendations — have gained acceptance in recent years for their ability to provide investors with easily accessible, around-the-clock financial services.

Not surprisingly, one of the biggest questions I hear in the industry is whether or not technology will ultimately supplant the human element of investment advice. After all, many people remember how travel agents used to be a critical part of vacation planning, before the internet age made it easy to book airlines and hotels yourself.

I believe digital tools can enhance the advisor-investor relationship, not end it. Instead of viewing financial technology as a replacement for traditional, relationship-based advice, I believe it should be viewed as a complement to the advisor’s existing practice.

Parallels with the tax preparation industry

Continue

Embracing the financial technology revolution

How ‘fintech’ can help enhance the investor-advisor relationship

Intraligi_Peter_sm_300dpi_RGB_fullshotWhile the financial services industry is often viewed from the outside as staid and unchanging, the truth of the matter is that a sea change is underway, radically transforming the industry. In many ways, this is good news. Enhanced transparency and a choice of service models may benefit investors. But these changes need to be understood.

The latest buzz is about automated investing — often referred to by its catchier name: robo-advice. I want to give robo-advice its due. The services under this moniker represent a marked improvement over the do-it-yourself approach to investing, which may provide investors with the means to invest, but with limited guidance as to where.

As a believer in innovation, I place high value on the power of new technology. For many investors, I believe a financial advisor remains the better option versus a fully automated approach, but better still is an advisor who embraces technology for what it is — a tool to better serve his or her clients.

How technology can help advisors serve investors

Continue