By David Miller, founder & CEO of PeachCap
Are robo advisors here to stay? Yes – absolutely.
Not only are they here to stay, but they are gaining value and are likely to continue winning over consumers. According to BI Intelligence, robos will account for 10% of all global assets under management by 2020, which is estimated to be approximately $8 trillion.
The writing has been on the wall for some time now and financial services industry experts have drafted numerous responses. Steve Sanduski wrote for Investment News, “Having modern technology is table stakes, but by doubling down on your “you” advantage, you can build a moat that will protect your business from the onslaught of cheaper competitors.”
When an industry is facing disruption and you hear anyone talk about ‘doubling down’, there is reason to be suspicious. Being more of yourself is not going to keep clients coming back, let alone win new ones. The idea that everyone gets a medal for showing up and being true to themselves did not save the taxi companies, RadioShack, or Blockbuster.
Instead, the financial services industry needs to take a hard look at what it can change. Survival in the next twenty years will be dependent on correcting systemic failures and identifying areas where human professionals can add unique value.
To be certain, part of the solution is adopting the robo trend and incorporating it into standard services. Every financial services firm can automate functions and provide clients with an always-on computer advisor.
When applied to managing one’s assets in an advisory capacity, artificial intelligence technology is in its infancy stage and is mostly a buzz word in our industry today.
It is important that we acknowledge robos are not gaining market share because of AI alone – they are gaining market share because fees are too high relative to the value provided and financial advisors are complacent.
In addition to embracing the technology wave instead of resisting it, the industry needs to focus on two key changes: value added human connections, and professional re-training.