While advisors are undecided about whether technology currently threatens their business, a majority seem certain that robo-advisors aren’t going to help.
According to a study sponsored by Jersey City, N.J.-based Pershing LLC, 27 percent of advisors felt that digital advice and robo-advising technologies were irrelevant to their practice, while another 23 percent currently felt that technology’s presence in the marketplace created additional competition. Just 19 percent of those polled felt that robo-advisors could complement their practice.
“Though most advisors are familiar with digital advice, a relatively small percentage of advisors are currently using this technology,” said Ben Harrison, head of business development and relationship management at Pershing. “The biggest opportunity we see for transformation is for advisors to automate low-value tasks, expand their reach and profitability.”
"The Third Annual Study of Advisor Success: Confidence and Concern in the New Digital Age," found that 73 percent of advisors feel that the relatively low cost of robo-advisors would eventually threaten their business. At the same time, 91 percent of respondents said that human advisors would never become obsolete.
The study, conducted in April by Harris Interactive, surveyed 350 advisors split among RIAs, wirehouse brokerages, independent broker-dealers, insurance agencies and banks.
Advisors’ ambivalence about robo-advisors stands in contrast to a Pershing-sponsored survey released earlier this year, which reported that 71 percent of investors found robo-advising platforms appealing.
The studies come as Pershing prepares to roll out its own robo-advising platform for RIAs.
Pershing, a subsidiary of BNY Mellon, also offered recommendations for advisors adjusting to the digital age. It suggested that they plan an approach to technology adoption, make client relations and communication more efficient, use technology to increase productivity and profitability and articulate the value of human advisors.
The study also found that:
- Most advisors were positive about the state of their business, with 47 percent reporting they were doing better than ever before.
- Seventy-three percent of advisors are satisfied with their careers.
- Nearly two-thirds, 65 percent, of advisors are somewhat or very familiar with robo-advising platforms, but only 5 percent currently use them in their practice
- Eighty-two percent of advisors felt that the greatest threat was digital services providing access to a human financial advisor.