It may be reassuring to hear that the big tech experts on our list this year don't think robo-advisors are too much of a threat. If the only thing you do for your clients is asset allocation, you might need to take a look at your value proposition, but many of our IA 25 honorees agreed that robo-advisors could be an opportunity for advisors to provide services on a broader scale.
That doesn't mean advisors can lull themselves into a false sense of security. Make no mistake, robo-advisors are a disruptive force. Just because they won't take away your business doesn't mean they won't change it.
Click through the following slides to hear from the IA 25 honorees who shared their thoughts on these new competitors, a topic that, as Editor-in-Chief Jamie Green said, "came up unbidden so often that I began to bring it up on purpose."
Bernie Clark
Executive Vice President, Schwab Advisor Services
Clark feels robo-advisors will exist as a "complement" to traditional advisors. "We've done a lot of work that shows most individuals still want a relationship" with a human advisor, he told Editor-in-Chief Jamie Green.
Clark suggested the solution may be for advisors to use some of the robo-advisors' modeling tools "in their practices," especially for "clients below their minimums or children of clients."
If that doesn't assuage advisors' concerns about the competitive threat robo-advisors pose, he pointed out that online advice hasn't had to perform in difficult markets. "If we have five years of the markets heading straight up," robo-advisors "will do well; if we have three years up and two years down," investors "will want to talk to somebody."
(Photo: Tom McKenzie)
Dan Skiles
President, Shareholders Service Group
Robo-advisors may be able to provide simple advice cheaply, but Skiles reminded Editor-in-Chief Jamie Green that your clients have complex lives. "Life is not consistent; questions come up throughout the year that you never anticipated." Robo-advisors provide a consistent investing experience, but human advisors "are there for those questions."
For example, Skiles ticked off some issues that advisors help solve for their clients: staying knowledgeable about cost-basis legislation, how to pay for health care, whether the timing is right to do a Roth IRA rollover. He asked, "Can a robo-advisor answer those?"
Skip Schweiss
