I agree with every one of these statements, and I actually contributed the last one. While acknowledging my bias as a human advisor, I actually do not see this generation of robo-advisors as a competitive threat. They are, in my opinion, still inferior to experienced, talented human advisors—at least when it comes to serving clients with more than the most basic of needs. But unlike many of my classmates, I most certainly do see them as a potential threat for the future. Artificial intelligence will continue to evolve, and the time will come when robo-advisors look very different—and more formidable—than they do today. Will the robo-advisors be the Apple or Google of our industry? More important, are we too confident and complacent to consider that possibility?
After class, I asked the professor what it was like when he taught the Wealthfront case to students who were not advisors. “Very different,” he said. Non-advisory students marveled at the concept of robo-advisors and even inquired about becoming customers. Many admitted that they already were!
So what did I learn during my one week at Harvard Business School? Well, I learned several things:
1. As advisors, we must never allow our success to lull us into a false sense of security. Instead, we must be constantly aware of the environment in which we operate. And we must remain in touch with the evolving needs and preferences of our clients.
2. We must innovate, and we must do so effectively. The phrase “survival of the fittest” is often incorrectly attributed to Charles Darwin. While he ultimately did embrace the phrase, he really wrote instead of the survival of the species that can best adapt and evolve to their environments. So it is for advisors. We, too, must adapt and evolve, lest we be naturally selected for extinction.
3. We must anticipate and respond to competitive forces, which could come from anywhere at any time. They may already be among us.
4. We must be prepared to collaborate to meet the challenges of the future—collaborate with one another, with external forces and even with our competitors if necessary. Yes, we must be less fiercely independent.
So how will advisors respond to the iPhone or Android equivalent of our industry? Will we see the threat coming? Will we take the appropriate course and make the right decisions at the right times? Are we prepared to innovate and collaborate even when we may see no current need to do so? Successful advisors who will guide their clients for decades to come must be prepared to answer these questions correctly, and there’s only one way to do so. We must be open-minded, humbler, more creative and far more aware of the dynamic world around us—including what we can’t see or don’t want to see.
Michael J. Nathanson, JD, LLM, is Chairman and CEO of The Colony Group.