Phillips said while the industry once thought automated advice might replace traditional advice, many wealth managers now believe it will complement their service models.
“We should be supporting anything that gets people to a better endpoint, but instead we’re spending a lot of time in turf wars,” Phillips said. “We should let the investors choose which channel they’re going into.”
Bernstien noted that digital tools that provide clients with a basic level of advice and investment options for low costs brings smaller investors into the industry. For an even larger range of investors, target-date funds approximate the functions of a robo-advisor at an even lower cost from discount brokerages.
“We’re broadening the lens,” Bernstien said. “It’s absurd to expect the people who are flipping our burgers, taking care of our kids and teaching our kids to be able to invest in individual stocks and bonds. This is as hard as flying a jetliner or being a brain surgeon.”
DuQuesnay said that younger, lower-asset investors benefit from streamlined account-opening processes and automated contributions.
“With younger clients it’s been tough, they’ve graduated college into one of the last two recessions, they’ve had to work jobs out of their field, there’s a lot of struggles, and we’re switching from a traditional employment economy to a gig economy,” which means they’ve had to set up their savings and investing plans themselves, DuQuesnay said. “We should just be focusing on setting up automatic savings plans as much as possible — setting up the automated-savings process is more important than selecting the investments themselves.”