To many financial advisors, the proliferation of digital financial advice is synonymous with the rise of robo-advisors, which in turn is synonymous with competitive business threats. To that, Cerulli Associates says, “Au contraire!”
“Many industry stakeholders assume that ongoing advances in digital advice platforms will empower investors to handle their financial affairs without the assistance of traditional financial advisors,” says Scott Smith, director at Cerulli. “Cerulli believes that while technology innovations will transform how services are delivered, there will be an ongoing, and potentially increasing, demand for personalized financial advice delivered by humans.”
In its U.S. Retail Investor Advice Relationships 2015 report, an annual look at the relationship between investors and financial services firms, the Boston-based research firm states that most U.S. households lack the solid grasp of financial topics needed to confidently call their own shot. So while there’s a growing number of online tools to help investors explore their options, Cerulli posits that the trend will ultimately spur demand for personalized advice as investors realize it could be helpful to turn to someone who can make sense of all of the available options out there.
“The ubiquitous growth of digital advice platforms is exactly the catalyst needed to accelerate the development of traditional advice providers to serve their clients moving forward,” Smith says. “Instead of perceiving the growing prominence of digital tools as a threat of disintermediation, traditional advice providers have an exceptional opportunity to encourage their advisors to fine-tune their practice model to capitalize on identified best practices and use technology to enhance their client relationships.”