It won’t take long before a conversation with a group of advisors turns to the subject of robo-advisors. “Can algorithms and technology really replace advisors?” The truth is, algorithms have been used for years by financial advisors, so there’s really nothing new about diversified portfolios, account rebalancing, tax harvesting and low fees, which are the calling cards of robo-advisors. What’s new is that robo-advisors use technology to work the way a new generation of investors prefers: sliders for setting goals and risk tolerance, investing in funds according to what the algorithms and calculators decide is the best risk/reward profile, and building efficient relationships with their clients by e-mail, cellphones and Skype.

It’s important to note that younger investors from Gens X, Y and now millennials, prefer online information rather than meeting people face to face. That makes this demographic, and all the wealth it is set to earn and inherit, a natural target for this kind of online service.

It’s too early to tell if the robo-advisor is here to stay or just a passing fad, but one things is certain, they can teach every advisor about how the next generation of investors likes to work and how to evolve your current marketing effort to speak their language.

Robo-advisors may not appeal to baby boomers (yet), but they sure seem to understand the audience they are trying to reach. Their message is unique, clear, transparent and decidedly different than the thousands of advisors and firms that all look and sound alike. Changing your message and the tools on your site may be just what new investors are searching for … literally.

Understand Tech Savvy People
Tech savvy people would prefer to use technology, online tools and services rather than dealing with people, especially people not like them. They don’t know enough about investing to sign up for an online trading account, but still want to know that someone is overseeing their investments. The robo-advisor model meets a need for this new type of investor. Don’t fight it. If your clients or their kids would prefer to work this way with you, a number of turnkey services can add this functionality to your Web site. What do you have to lose?

Let’s face it, most investors don’t know how an advisor makes money and how much they are paying in fees and/or commissions. It’s getting more transparent, but most investors can’t explain it and deep down don’t trust Wall Street.  Robo-advisors are much more clear (because they need people to sign-up online) and put their investment strategy and fees right on their home page. Furthermore, their rates are very attractive for prospective investors. If the average fee-only advisor charges 1.25% of assets under management and the robo-advisor charges .25%, people are going to take a very close look. Why not be as transparent as robo-advisors, explaining your fees and why you are worth it?  Okay, you may not want to put this on the first page of your Web site, but you probably shouldn’t bury it either.

I have been told for years that I should meet at least semi-annually to review my plan and make sure my advisors know what’s going on in my life so they can manage my money accordingly, but despite my best laid plans, I rarely meet with them.  Robo-advisors understand that few clients – especially younger ones -- want to meet with their advisors.  They’re set up to use e-mail, cell phones and Skype, which are the preferred tools of their clients, and they use these very well. While it seems like robo-advisors are revolutionaries, the truth is in 10 years everyone will do things in this way, so it may be smart to work this way now.

Most investors don’t know what investments they own, how much they are worth and if they are performing better or worst than other investments options. Chances are they have access to their accounts online, but they rarely use them or track their progress overtime. On the other hand, robo-advisors' clients are always online, always checking their progress, and are better informed, not because robo advisors provide more information, but clients of robo-advisors are more adept with the online tools.

Figure out how often your clients check their online accounts, and if they don’t check them often, train your clients now.  If you don’t train them, they may not realize the power of what you provide them.  If they don’t know this, they may think another firm is more accountable.

Like most advisors, robo-advisors look really smart as the market grows. At the first sign of a downturn though, investors will want to speak to someone they know and trust to figure out what happened and what to do next. The advisor who can help his clients take the long view and keep their emotions in check will serve investors best. But if you provide investors with some robo-advisor tools now, you will be offering them the best of both worlds. This isn't revolutionary, it’s evolutionary. It's easier to act like a robo-advisor – without actually being one -- than you think.

Craig Kaminer is founder and partner of Evolutionize, a leading digital marketing firm focused exclusively on advisors, and a 30-year marketing veteran. He can be reached at [email protected].