Recent research has made it clear that consumers want hybrid financial services that blend traditional human relationships with access to technology like websites and applications, but financial firms will have multiple options for meaningfully combining the human with the digital.

What might the bionic future of the industry look like?

The pandemic has augmented consumers’ love of being “somewhere in the middle” of human and digital interactions and accelerated a shift toward the digital, said Mike Sha, CEO and co-founder of SigFig, which operates both as a business-to-business investment service and a business-to-consumer robo-advisor.

“People want the mix of humans and the value they add with technology and automation and all of the experience and efficiency gains of having parts of the experience digital,” said Sha. “One of the topics we’ve been passionate about, the idea of virtual collaboration with clients, was accelerated by the shift away from in-person, physical interaction that the pandemic put upon us—the world recognized that we can serve clients remotely, it’s convenient for everyone involved. We’re still in the very early innings of that playing out across the industry.”

Apart from the obvious growth in the use of tools like Zoom, Microsoft Teams and Google Hangouts, Sha said that firms are now exploring other collaborative and interactive opportunities for clients using technology. Firms are also starting to use policies that allow working remotely or from home as carrots in advisor recruitment.

People Do Want Digital-Human Hybrids
A recent Envestnet-sponsored survey of 2,158 U.S. adults found that a majority of Americans, 58%, found financial applications like investment, money management and banking apps important to achieving their financial goals. However, a subset of the surveyed adults who said they worked with financial advisors were also significantly more likely to say that financial apps were important. Seventy-six percent of this cohort said apps were key to achieving their goals.

Yet the same survey also found that 58% of Americans across generations prefer to manage their finances more through human interaction than digital means.

“A lot of research is showing that people want a little bit of everything—they want to feel like they have their hands on this stuff, but they also want to talk to someone,” said Sha. That means combining self-directed investing with managed human support, he said, adding “that will end up resonating with more people than trying to exist on one end of the spectrum or another. Very few people seem to want the extreme all-human or all-digital experience.”

Robo-advisor companies that add some kind of human personal advice service, perhaps access to pools of CFPs who can remotely serve the clients, may have found the promising middle ground between human and digital advice, said Sha, who added that consumers are likely to already think of robo-advice as a “sweet spot” combination of self-directed and managed investing.

“There’s not going to be one answer. It’s less about one place that this trend will settle and it’s more interesting to think about all the different permutations of the mix between human and technology,” he said. “One of the most prevalent evolutions we’re seeing is the creation of a centralized delivery model experience using a centralized advice or advisor team.”

The Perils of Looking Downward
But Sha says that advisors shouldn’t necessarily be thinking about technology as a way to move down market and serve more mass affluent or middle-class Americans. Banks already have a big advantage here.

“It’s an incredible business model if you’re a retail bank because you have legions of mass-affluent consumers who are already your customers,” said Sha. “If you already have these consumers, you’re positioned to win with this strategy. Someone like a stand-alone robo-advisor is stuck trying to fight the customer acquisition war, and so are financial advisors who do this. For the banks, it’s a much easier fight to win.”

As banks increase their fintech investment, they are building the consolidated, holistic financial solution that many consumers seek, said Sha.

The non-bank fintechs “are really in a tough spot here, because they are usually starting in one place with lending, deposits, investments or something, and then they’re trying to win credibility across new product lines they are launching,” said Sha. “They have to fight so hard for relevance and trust and things like that, things that most banks already have.”

A Less Personal Future
The future of the industry is one where more clients are served by teams of advisors, and there isn’t necessarily a unique one-on-one relationship between advisor and client, said Sha.

“You might not have a dedicated advisor that you see at all,” he said. “You dial an 800 number and it ends up being whoever picks up the phone. That’s kind of the Vanguard-style centralized model.

“As we get more comfortable with remote engagement, we’re going to find ways to make ‘centralized’ not mean ‘anonymization.’ Pooled resources allow for quality and efficiency gains, especially if people are armed with the right technology to help them understand who the client is. It’s becoming less important to talk to the same person every time you make contact.”