Page 3 - Investment Advisor April/May 2022

04.22

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No, Your Client Won’t Ditch You for a Robot: Survey

Are technology and digital advice a threat Twenty-nine percent of surveyed advi-
to human financial advisors? To find out, sors reported that estate and trust plan-
Vanguard in July surveyed 1,518 U.S. inves- ning was one of the top two financial
tors with at least $100,000 in investable matters their clients were planning for or
assets who reported having a human advi- considering. Nine in 10 advisors said their
sor, using a digital service or both. They clients were proactive, and half said they
also conducted qualitative interviews with were highly proactive in managing their
25 investors and 15 advisors to under- estate and trust planning goals.
stand how and why investors choose Forrester Consulting conducted a
human versus digital advice services and achieving their financial goals thanks to survey of 221 U.S. financial advisors in
the tasks that define each service model. their financial advisors, versus $50,000 November to gain insights into trust/
The research showed that study partici- closer for digital-advised clients. estate planning for HNW clients.
pants believe advice provides higher incre- Digital advice holds its own in one According to the study, outdated tech-
mental portfolio value than going it alone, regard. The study found that across all nologies impede customer experiences
regardless of delivery method, but digital generations, wealth levels and advice- and do not keep up with their estate/trust
services do not threaten an advisor’s delivery types, clients think that human planning expectations. Not only that, 66%
book of business. Ninety-three percent of advisors should consider automation to of advisors still use paper-based documen-
human-advised clients said they would outsource portfolio construction and func- tation that software cannot process yet.
use a human advisor in the future, where- tional tasks, such as account setup and Thirty-seven percent of advisors said
as 88% of robo-advised clients said they consistent monitoring. This is good news technologies that are outdated or miss-
would consider switching to a human. for advisors, according to the researchers, ing key functionalities are one of the top
The study quantified the value that because it will allow them to scale tech- three hurdles that prevent them from bet-
investors perceive in human and digital nology to their entire client base. They can ter managing their clients’ financial plans.
advice services across a three-pillar then focus on delivering uniquely human Thirty-six percent also said technologies
framework of portfolio, financial and skills that help clients achieve financial can be cumbersome and difficult to learn.
emotional outcomes. They found that success and provide peace of mind. Another barrier is that clients hesitate
human agents excel in all dimensions. The study concluded human advisors to disclose private information, accord-
Investors’ perceived value-add to annu- should leverage both automation and ing to a third of advisors — implying that
al performance was 5% for human advice upskilling about emotional needs of cli- trust is an issue and that clients need to
and 3% for digital-only advice. Human ents to optimize their value, scale their feel a certain level of control, according
advisors also provided three times the practice and target the unmet needs of to the study. Similarly, 32% said market
emotional support, compared with self- investors who are robo-advised and who conditions and financial uncertainty leave
management of investments. would be willing to switch their business clients concerned, which further adds
Both human- and digital-advised cli- in the future. strain to their financial planning needs.
ents believe that their advisors add sub- Advisors know they need to keep pace
stantial financial value in helping them Estate and Trust Planning Tools Needed with client demands and needs around
achieve their financial goals. To convert as Demand Surges: Survey estate and trust planning, according to
perceived financial value to dollar terms, Estate and trust planning are top of the study. Asked what types of financial
the researchers used $1 million as the mind for high-net-worth clients, accord- planning tools they lack or do not have
enough of, they specified several. One,
ing to a new study from Envestnet
median financial goal of both human-
Adobe Stock advised and digital-advised clients. They MoneyGuide. The study also found that smarter technologies. Two, personalized
found that human-advised clients per-
advisors need more efficient processes
tools. Three, more interactivity and col-
laboration. — Michael S. Fischer
to satisfy their demand.
ceived themselves as $160,000 closer to
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