Technological innovation is a driving force in business, politics, philanthropy and the humanities. The auto industry is a great example of how rapidly leaders have had to confront a marketplace where fewer people own vehicles.

Just as automated vehicles are an innovation that is upending the traditional automotive profit model, so too has automated investing emerged as a disruptor challenging the traditional financial advisor. Customers are now able to open an account, decide their risk and create a portfolio, and automatically invest without ever speaking to a person. In a world of automation and information, how does a financial advisor continue to be relevant?

More important, how can individuals seeking advice—people who are bombarded in every direction by differing opinions—make educated decisions about whom to trust for something as important as their financial future?

Robo-Advisors—Context And Disadvantages

The rise of robo-advisory, automated systems that provide risk-appropriate allocation portfolios with little or no in-person interaction, has been hailed as the future of investment advice—and is much feared by financial advisors. For clients who have few planning needs and want the very low cost, yet also still want the asset allocation and diversification, robo-advisory offers a sound solution. These online services automate investments and allow low minimums and low contributions. For people who have no dependents or who simply want to dip their feet for the first time into investing, the robo-advisors can be an easy and inexpensive way to start.

One disadvantage of these digital platforms, however, is that they generally receive a limited amount of data, and that limits the planning that can be done with them. More important is that a robo-advisor does not provide a comprehensive plan that integrates protection, accumulation and distribution strategies. Furthermore, many people still prefer to work with someone face-to-face and to have a personal relationship with their advisor.

Individual Advisors—Education and Advantages

There are many reasons, however, that consumers may still want to work with individual advisors. Human advisors offer distinct advantages, including comprehensive planning and a one-on-one relationship. As a person’s life and circumstances change, a human advisor can be a trusted resource to make important decisions about someone’s finances. Yet oftentimes people do more research to buy a pair of shoes than they do to seek out someone to manage their life savings.

Advisors can also offer educational direction to customers in making the advisor decision:

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