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.

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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

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