Robo advice is increasingly prevalent. Some advisers, though, are still a little wary of technology and unsure whether robo advice will really generate the best results for both their businesses and their clients. In this article, we investigate the great debate of man vs machine.
The increasing popularity of robo advice has arisen because it meets clients’ needs in terms of providing an online solution, which is quick and cost-effective. It’s also backed by many of the big players in the industry who see it as a way of overhauling their business model. By having machines pick funds, they can cut costs by reducing jobs and reduce fees. In this day and age, it is all about offering a value proposition at a competitive price, which will attract investors. That may be by offering a hybrid between active and passive fund management. Undeniably, robo-advice is here to stay.
However, human advice does have significant benefits too. An adviser can assess a client’s needs through in-depth discussion and carefully tailor some financial planning recommendations to suit their circumstances as a result. They can fully explore a client’s risk profile and be alert to any potential changes on the horizon. Robo advice, on the other hand, does not seem to recognise the ‘input’ humans can have on the process. When so much advice is based on trust and the relationship between a client and adviser, it is hard to see how this can be replicated through a machine.
The ultimate solution seems to be a combination of the two; to recognise the efficiencies that robo advice offers but at the same time, retain the benefits of the human touch. Unlike Terminator, machines don’t need to completely destroy humans. It doesn’t have to be a case of either/or. Instead, both can work successfully together in parallel but consideration does need to be given to how they can best complement each other.
CleverAdviser is a solution which advisers can employ as a way of reaping the benefits of robo advice whilst still retaining the benefits of the human connection. It offers the benefits of objective, rational fund selection, using computer algorithms, while at the same time maintaining the ongoing adviser/client relationship as the adviser explains the ‘bigger picture’.
One thing’s for sure, the industry is constantly evolving. In this context, the best investing performance would seem to be when ‘man and machine’ work in tandem together. And to keep abreast with the pace of change, it’s important advisers keep exploring ways of combining the two, otherwise they could face the ‘rise of the machines’!
Interested in finding out a bit more about how we work with the machines? Book a demo here.
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