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Robo Vs. Human Advising: Finding The Right Balance

By Loren Padelford

Meet the new financial advisor: Instead of a finely dressed salesperson armed with the latest marketing collateral and information, customers are increasingly getting investment advice from an online robot or “wizard.” Because these “robo-advisors” offer a range of algorithmic tools that are engineered to make quick and supremely accurate investment projections, financial advisors are not unwarranted in feeling robo-advisors are a threat to their services and the value they add.

However, because the relationship between a financial advisor and client has traditionally been one based upon face-to-face meetings and conversation, what robo-advisors have in information management, they lack in the most important aspect: human interaction. In fact, the Futurewealth Report 2014 by SEI marks “human interaction as the key driver to a strong customer experience.” It ranks the “understanding of individual needs” as one of the three highest-rated factors that advisors offer to their clients. Rather than replacing the human, we highlight a number of ways that today’s financial advisor can adjust to the technological advancements affecting their industry and use them to help, not hinder, the overall service provided.

Change the way you think about technology

Just as the adoption of the computer over pen and paper was, while unfamiliar, inarguably a step forward, those in the financial advisor profession need not fear the “robo-advisor.” Instead of resisting the technology robo-advisors have to offer, the key to enhancing the client experience is to embrace these new technologies and take advantage of what they have to offer.

While the idea of a robo-advisor sounds very advanced, remember that financial planning and advising consists of much more than making simple projections. Financial advisors provide the insight and experience to truly guide their clients. One-to-one interactions may no longer be enough for financial advisors, but face-to-face conversations and client-specific advice can always be complemented by technology as a constant support system.

Clients want information in real time, all the time

Quick turnaround has always been important in the ever-moving financial field but now, more than ever, advisors must respond to their clients and investors in real time. Clients want information now – and why wouldn’t they? We live in a 24-hour news cycle. Money and wealth is constantly in flux. Your clients go to bed having X amount of money and wake up having Y. An advisor who is able to provide information that is more real-time than a human could ever hope to be, along with a personalized interaction, is in a much better position to keep a client relationship strong in the long term.

Whether it is looking up information on laptops late at night or reading their Twitter feeds while sitting in traffic, clients have come to know much more about the industry than ever before. In fact, there are countless websites and apps designed specifically to simplify the investment process for the layman. Advisors must adapt and become more savvy, because clients will no longer settle for answers that reiterate what they already know. As clients are constantly learning more about their finances, financial advisors must, in turn, learn more about their clients – their unique needs and expectations – to reinforce the relationship and provide information that is pertinent only to them.

Advisors Guide to Selling IUL

Collect new data sets on clients

With clients and investors having increased expectations and knowledge levels, financial advisors must become much more valuable to their clients. Therefore, adaptation is essential. If you could obtain previously unattainable insights and data regarding your clients’ interests and needs when it came to their portfolios, would you? Enter customer relationship management (CRM), predictive analytics and adaptive sales enablement technologies. Big words with one simple goal: creating a better relationship with your clients.

CRM can be a valuable stockpile of information, if used to your advantage. But what advisor has the time to manually populate and retrieve information after every client interaction? The good news is, instead of having to input seemingly meaningless details into a database without context, there are a number of new applications that extend CRM value to the point where information is automatically populated and fed back to you.

Every investor wants an advisor who can understand their specific needs. Based on every advisor-investor interaction, predictive analytics and adaptive sales enablement allow advisors to see client reactions in real time, which in turn allows the advisor to adapt quickly to offer valuable insight into where the client’s focus is. With the support of technology, advisors can determine the best course of action and specific needs for individual clients.

Increase customer engagement

With all of this technology available to track the client and enhance the relationship, the final piece of the puzzle is putting it all together to ensure the best client experience possible. A recent survey by SEI revealed that 57 percent of financial advisors don’t believe their technology or processes ensure a consistent client experience, and 52 percent said the reason they don’t keep pace with the latest technology tools is that they are busy on daily operational tasks. By embracing the technology that is offered today, advisors can take advantage of that constant support system to provide increased value and build stronger long-term relationships.

While technologies like the robo-advisor can algorithmically determine what investments may be best for someone or predict how much money they will need in retirement, it is the full experience and relationship between an advisor and an investor that is irreplaceable and most valued. Insightful conversations and one-on-one interactions shape your clients’ beliefs about money and maintain their trust in you. Why not use technology to enhance those relationships instead of than letting it diminish them?

Loren Padelford is executive vice president of sales with Skura. Loren may be contacted at [email protected].


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Advisors Guide to Selling IUL