How is the Wealth Advisor's Role Evolving with Robotics on Field?
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How is the Wealth Advisor's Role Evolving with Robotics on Field?

By Capital Markets CIO Outlook | Thursday, October 24, 2019

Wealth management advisors can amalgamate their efforts with technological advantages in order to excel in the future.    

FREMONT, CA: Wealth management advisors have been among the first few to adopt the technology. Whether it’s a fax machine, laptops, or software, advisors have always tried to leverage the latest innovations to optimize their tasks and offer better service to their clients. Despite the above trend that places wealth management advisors in line with technological innovations, the next disruption in the sector might be challenging for the advisors. A Robo-advisor is one such innovation, which is a program that can perform a range of activities like delivering an asset for allocation to trading the portfolios accordingly.     

According to a study, most of the wealth management advisors spend only 10-15 percent of their time trading or dealing with the client’s finances. Therefore, their most of the time is spent in convincing and communicating ideas to the clients. Indeed the term ‘Robo-advisor’ is a misnomer as the robots are incapable of advising or convincing the clients at present. Moreover, clients experience a trust factor because of the presence of a human advisor who can offer solid, documented financial plans. For instance, a human advisor can offer comprehensive financial plans, including risk management, investment planning, income tax planning, retirement planning, family governance, estate planning, and advice on any other financial issues that the family is facing.

Advisors, on their part, need to justify their fees against the value that they are offering. If the only service that an advisor is offering is using asset management-tools or third-party services for financial solutions, then it’s time to rethink. Robo advisors will soon emerge with similar capabilities and at much lower prices. Advisors need to work on several aspects, such as developing their soft skills as well as hard tech skills if they wish to remain in an increasingly competitive market space. After all, a client might be interested in knowing what more the advisor is doing besides overseeing the management of a portfolio. If the advisor is unable to convince the client, it won’t be long before a robotic advisor replaces the human advisor.

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Soft skill is one of the key aspects that will allow the advisors to continue adding value to their clients. Skills such as empathy, listening, natural conversations, convincing skills, and adding trust to the advisor-client relationship will place the advisors above their robotic counterparts. For instance, good listening skills will enable the advisor to interpret hidden meanings and to understand what a client wants. Apart from the above, a good financial advisor needs to be adaptable. For instance, an advisor may come across various clients in a day. An argument or a statement that works for a client may not work for another. Moreover, investment and the financial sector is a highly dynamic zone with tightly-regulated and ever-changing rules. Advisors need to adapt according to the new rules as well as the technologies along the way.

Tech skills are another important area where advisors must be well-versed. An advisor must be proficient with hardware and software that are essential for everyday tasks. Apart from these, an advisor must have a working knowledge of the digitally disruptive applications such as peer-to-peer lending, managing investments, bitcoins, and several other emerging applications. An advisor with an eye on emerging technological trends will have greater probabilities to excel. Further, a smart advisor will try to connect various technologies to manage workload in an efficient way. Tech skills will also enable the advisor to save a significant amount of time, which can be utilized for more productive purposes, such as advising more number of clients.   

Apart from soft skills and tech skills, advisors can offer better value to their clients than the robotic advisors by assisting the clients with long term investment plans and goals. A human advisor can create even nuanced investment plans for a client’s changing motivations and life circumstances. Thus, the future seems bright for advisors who are geared up for welcoming evolving technologies.   

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