Are You Really Ready For A Robo Adviser?

Artificial Intelligence has landed, and is probably flooding an office park not far from you, but are we really ready for a Robo Advisor?

Just in case you think this is a fad that might just go away, it's time to think differently. Ford launched their new hands-free self-parking vehicle, and self-propelled cars are already on the road in the UK. If a car can become so advanced to the point that it doesn't need a driver, why would a client need an advisor?

The extent to which technology will infiltrate our lives in the future is in some ways unimaginable. Think about how long technology has been around, and how it has evolved. The iPad is 5 years' old, Twitter is younger, and Snap Chat is an infant that's worth billions in the US.  

This begs the question, why would a client rather do business with you? 

So how do we fend off the Robo Adviser threat? The obvious answer is that the Financial Advisor offers the human element that the Robo Adviser cannot. But how best to harness this competitive advantage over the Robo Adviser? Kim Potgieter from Chartered Wealth Solutions suggested financial planners offer Financial Life Planning rather than just Financial Planning. In essence, she argued that by understanding the life of a client better, and very importantly their relationship with money, their financial plan would be more meaningful and relevant to their life.

Many financial advisors are their clients' "coaches", "strategic partners", "educators", "guides" and "personal CFOs". The privilege and curse of the 21st Century is that clients who need the services of a Financial or Robo Adviser are likely to be looking for more meaning, purpose and balance in their lives. As Kim Potgieter says, they need their money to connect to their lives.

So helping clients determine what that they want from life, and how their money will help them get that is where the opportunity for Financial Advisors lies. But this is not simply about doing a financial needs' analysis. If we're honest, the Robo Adviser can probably do that more effectively than any human. It's about understanding a client's relationship with money. Their experiences of money growing up, their experiences of financial advice, and their view on what their money is for. This involves taking a holistic approach to financial planning.

It is also about the client's aspirations for their life, and the transitions they need to navigate through each stage of life. It's about having someone they can confide in, seek counsel from, explore with. Someone they can communicate with on an emotional as well as a rational level. Someone whose hand they can shake. Maybe even share a hug, but definitely a laugh. It's about someone they can have a meaningful relationship with. Your opportunity to overcome the Robo Adviser lies in this.

Take it or leave it. Just remember, the Robo Adviser is only a click away.

June 28 2017 By Rob Macdonald, Fundhouse Robo Advisor, Fin-Tech