Financial advisors and wealth managers are only willing to provide these services at premium prices, and only HNWIs can afford. With the rise of robo-advisors, however, the costs and time have gone down significantly, enabling forward-thinking firms to avail these services to the mass affluent.
Back to the question of why discretionary hedge funds have been performing abysmally despite having an integrated approach to investing. The answer trickles down to innovation and technology. We are in an age where big data is the king of competitive advantage, meaning firms that are failing to learn from big data are on the edge of extinction.
Financial Advisors Seek to Remain Relevant
Financial advisors who look to remain relevant in today’s investment industry must be ready to embrace technology but at the same time work towards improving investors relation.
According to a forecast report by MyPrivateBanking, hybrid investment solutions will control over 10% of the total global investable wealth by 2025.
While there is no doubt that computer algorithms have grown to become better financial advisors than humans, there are roles that only humans can play, and these cannot be possible without an integrated approach to investing.
Investment alignment is not only about bringing CPAs, financial planners and attorneys together but should also include assessing the investor’s emotional intelligence and helping them set realistic investment goals. Without emotional intelligence, the benefits of investment alignment can never be achieved.
Individuals RIAs and wealth management firms who do not know where to start in offering investment alignment to the mass affluent will lose ground to firms that specialize in such services.
This article has been republished with permission from Modest Money.