Danger, Will Robinson! Where Robo-Advisors Are at a Disadvantage

Whenever I hear the term robot, I always imagine the mechanical member of the crew from the old television series Lost In Space. The robot, whose name was simply “Robot,” was Will Robinson’s sidekick and was often heard warning the boy of impending doom with his famous catchphrase.  While we all want to keep up with advancements in technology, and robo-advisors do have their place, here are three areas where humans clearly outshine their robotic counterparts:

1. Relationships
Sorry to inform Will Robinson, Hollywood, and TV audiences, but Robot was not this character's best friend – it was merely a machine. When it comes to important financial advice, many people want to talk with someone they trust and not simply listen to a computer that picks numbers based on algorithms. That's your job as the advisor: communicating this information to their clients on a personalized level. A robot also won't ask about your kids, take you out to lunch or discuss your big-picture financial future. Talking with a trusted advisor leaves most clients with more overall peace of mind and security than trusting their investments to a computer program.

2. Legacy
While robots might last forever, unfortunately humans don’t, and usually need consultation on matters that arise later in. They are often concerned about issues such as the most efficient way to leave assets to surviving family members, minimizing tax burdens, and the smartest ways to make charitable contributions. Mechanical advisors can't go into detail about advantages and disadvantages of different strategies or discuss clearly defined philanthropic goals.

3. Transitions
Another difficulty for robo-advisors is dealing with transitions in life: those unexpected changes and other events that can have drastic effects on an investor’s financial situation. Marriage, divorce, death, additional children, and catastrophic injuries and illnesses can all paint a new financial picture. Can a robot really understand the impact of these events and offer effective consultation?

As an advisor, your clients come to you for solid investment advice and the human relationship that comes along with it. So make sure you’re providing the best personalized service while also keeping up with the latest technology advances.

Carlos Coutin is Financial Services Technology Strategist at Envision Consulting, He is passionate about RIAs and entrepreneurship, something that led him in his quest to advise people like him, who want to make the best possible tech decisions without stress and with intelligence. Visit his website at www.envision-consulting.com. You can email Carlos at: ccoutin@envision-consulting.com and follow him on Twitter @carlos_coutin.
 

 
 

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