To Top

With the Rise of Robo-Advisors, What is the Financial Advisory Industry’s Future?

In this modern world where technologies continue to evolve, new state-of-the-art robot-advisors like Betterment and WealthManagement have emerged that threatened to get rid of traditional financial advisers.

Most millennials nowadays tend to choose these algorithmic, cost-effective robot-advisors in managing their money, finances, and investments. With the rise of robot-investors, will there be a future left for the traditional financial advisers? Here’s what the industry experts have to say in an exclusive interview conducted by Forbes.

Where Do You See the Financial Advice Industry Five Years From Now?

According to Marc Lieberman of Shorepine Wealth Management, the industry will still thrive despite the emergence of robot-advisors. He claims that there will always be someone who will be in need of a financial advisor. He noted how advising an individual as well as their families guarantee the highest return on their investments. The secret? It’s because a dedicated financial advisor like him works closely with his clients and his family, enabling them to adjust their financial goals as they walk through different stages in life.

According to Lieberman, the true value and success in being a great financial advisor lies not only in protecting your client’s net worth but also in nurturing the family to make sure they’ve achieved financial freedom.

Meanwhile, Ed Snyder is hopeful that regulations will be implemented for the consumers to determine the difference between a real financial advisor, a robot-advisor, a broker, and a salesperson. According to him, the other professions mainly target their sales or commissions. Thus, doing a hard-selling strategy to close a deal while a real financial advisor aims to educate the client in handling their finances properly. According to him, the products they endorse like insurance and investments are just instruments to let their client’s money grow.

What Advice Can You Give to an Aspiring Financial Advisor?

Ed Snyder advises the aspiring financial advisors to choose their firm carefully as the company will help them not only in managing their own finances but also in their career growth. Snyder emphasizes that a good financial firm must be sensitive enough to let their employees grow and achieve financial freedom so that they can extend the same thoughts to their own clients. If you feel like you’re not growing in the company you’re in, don’t hesitate to move to another one until you find the right firm for you.

Snyder reiterates how it’s easier to find a good local financial firm right now compared to how it was 10 years ago.

Meanwhile, Rosemary Frank of Rosemary Frank Financial says you need to find out which area you’re passionate about before embarking your journey as a financial advisor. Are you passionate in protecting your client’s lives and family in case something happens to them? Or are you more interested in letting your client’s money grow to its maximum potential? Choose your specialty and thrive hard to excel at it rather than becoming a generalist just to earn maximum commissions.

How Can Traditional Financial Advisors Compete With Robot-Advisors?

According to William D. Lee of Ironwood Investment Counsel, depending on robo-advisors to manage your finances isn’t nearly as effective as what the traditional financial advisers can do. He says just one power interruption, weak network connection, or malfunction and they’ll be unavailable to attend to your needs.

He also adds how a robot-advisor cannot make advice or produce a flawless computation without considering the inflation, opportunities of a new tax code, and the market’s longevity unless the programmer or developers manually add those features in the AI. Whereas a traditional financial advisor focuses on building working relationships to ensure you’re financially ready as you go through different stages in life.

Meanwhile, the CEO of Personal Capital Jay Shah says that while there are advocates on both sides, the public neglects to admit that neither can stand alone and be sufficient enough in giving the best financial advice. There are times where the financial advisor might commit a mistake in crunching out the numbers manually, or the robot-advisor might perform the wrong algorithm which will cost the client more in the end. It’s better for both tools and procedures to work together than to keep compare them.

More in Business

You must be logged in to post a comment Login

Leave a Reply