In the Robo-Advisors segment, the number of users is expected to amount to 543.167m users by 2027. (Statistica)
But what impact is this having on wealth management?
Years ago, there was talks of robo-investing taking over the human advisor role, but that never happened.
That’s because wealth managers are working in a relationship driven industry.
In fact, clients don’t only pay for advice, they pay for a personal relationship with an advisor who not only understands their goals but is managing their portfolio in accordance with those goals.
Of course, robo-advice did disrupt the wealth management industry. Consumers now have access to data, real-time service, aggregated platforms and many other tools.
This has caused financial advisors to have to go above mailing a statement. Now, clients want to co-create with you, they want to be involved, and they want to work with you.
So a major advantage of these investing platforms is that most of them don’t require a minimum amount of funds in the user’s portfolio. This means that investing is more accessible than ever before.
So instead of only serving 5% of the population, firms can offer self-service tools to anyone who wants to invest, so that someday, the invested funds can be taken over by an advisor if the client wishes to do so.
In other words: Wealth management firms have access to a bigger target audience. But It’s up to them to capitalize on this opportunity. Advisors have to clearly articulate how their services complement other investment channels for optimal portfolio performance.
Pros of robo-advice:
Cons of robo-advice:
Robo-advisors are usually a viable option for:
Modern professionals have shifted their way of thinking. It isn’t advisors versus robo-advice. It’s advisors and robo-advice. Both play a role in different stages of the investor’s lifecycle.
Many people are beginning to see financial advising as a commodity, viewing it as nothing more than a service with no real value to offer. This obviously isn’t true.
Financial advisors can overcome this false belief by having a clear value proposition that clearly outlines the unique value they bring to clients.
This value proposition should be:
This can help to differentiate your services from the competition and make it easier for clients to understand why they should choose you over other advisors.
Once you’ve crafted your unique value proposition, you should use it when:
💡A 10-year-old kid should be able to explain to another 10-year-old kid the value you provide. Keep it simple!
Annamaria Testani
Head of Client Experience, IG Wealth Management
If your value proposition is stuff that a computer can generate by itself, you can’t blame people for thinking that your service is a commodity.
During the 2007 market correction, investors were nervous to say the least. Financial advisors were able to say “You know what, you need to calm down. There’s an auto-correction. There was a run on the market, let’s look at what you own and adjust.”
This type of rational thinking is what advisors get paid for!
For those who held their investments or doubled down, this one piece of advice helped them take advantage of the market correction instead of overreacting to it.
In other words: Financial advisors help people navigate through emotional instability caused by overwhelming amounts of data coming at them.
In order to learn about:
Download ebook: Disruptive Trends in Financial Services: How to Adapt and Grow
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