That may explain why companies like Betterment have decided to add call centers of human advisors to their service offerings, says Ndege.
“I think these tools are helpful, but they don’t really do much to bolster the trust element between the client and the advice they receive or to add face to the advisor,” says Ndege.
Professional advisors deliver value by designing plans intended to both achieve long-term financial goals and behavioral interventions that help investors stay on track, says Ndege. By determining a client’s risk capacity and goals and asking certain behavioral finance questions, Pocket Risk creates a better psychological profile with more action points for advisors.
For example, Pocket Risk asks whether clients tend to stick to the plans they make and the goals they set -- clients who have difficulty staying the course may require more direct attention from their advisor, especially during down markets.
Pocket Risk also asks clients about their ability to save, their ability to weather emergencies like a job loss or a health crisis, and how they currently allocate their assets.
Ndege says that tools that take a more comprehensive view of an investor’s relationship with risk can help advisors spend more time developing their behavioral value proposition.
“Successful financial planning is all about the long game,” says Ndege. “Technological tools should be about helping advisors educate clients so they can make the right decisions about their finances, and to understand client risk levels so that when a market crash does come, they feel secure.”
Ndege argues that in the end, advisors may want to resist the urge to accelerate the client acquisition process by making it purely digital. Rather than adopt technologies that make their services resemble commoditized robo-advisors, advisors should find tools that enhance their ability to create financial plans.
“Technology is great because it can help advisors to be more efficient, but advisors must also think about being more effective,” says Ndege. “You have to find the right balance.”