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The Personal Touch – Why Bots (probably) Won’t Replace  Human Financial Advisers

Much has been written and said about the imminent arrival of a new phase in the ongoing technological revolution – a phase that will see robotics, artificial intelligence and data analytics joining forces to replace many of the jobs that are currently carried out by humans.   

But the truth is that the future is – at least to some extent – already here. Artificial intelligence driven bots are part of our lives and human beings are remarkably comfortable with it. So much so that millions of people around the world are happy to interact with voice activated bots such as Alexa, Siri and Cortana, and at a slightly less elevated level, automated self service has at least partially replaced human check out operators as the fastest way out of the supermarket.

The Rise of the Robo Adviser

Cross over to the financial services marketplaces and something that is arguably even more remarkable has happened. In the arena of investment advice, so-called robo-advisers have been with us for more than a decade and they are increasingly widely used.    

Robo advisors undoubtedly fill a gap in the market. Built around advanced data analytics, the role of these bots is to provide relatively low cost wealth management services. At its simplest, an investor provides the robo-advisor with information on his or her investment objectives, appetite for risk and available funds. The bot then takes this data, maps it against an analysis of the market and then recommends  (from its digital perspective), an investment strategy that aligns with the clients intentions.

In an ideal world, this is exactly the kind of thing that machine intelligence should be doing. Mostly used for asset allocation, the robo-advisers recommendations are not based on the opinions or prejudices of a human, but on a cold and dispassionate analysis of the numbers.  

There are now more than 100 robo adviser services, but does that mean that investors have warmed to them?  

Partial Acceptance

Well, yes and no. According to the latest Digital Demands survey by Charles Schwab, robo advisors have been at least partially embraced by their target customers. The survey finds that while three quarters of us would rather a robot didn’t fly an aircraft or drive a car with no human input, 47%  are comfortable with a digital adviser taking the lead or playing an equal role (alongside a human) in putting together an investment plan. An even higher percentage would be happy to have a machine play a dominant role in managing day-to-day finances.  

So does this mean than financial advisers should be looking round for alternative forms of employment?

The answer to that question is no. The crucial factor to remember is that even those who are comfortable with robo advisors expect humans to play some role in the investment management process. What’s more,  the survey also finds that 86% of respondents (all in the US) want the brands they interact with to make it easy to talk to real human beings.

A Real Conversation  

That shouldn’t be a surprise. Financial advice – and particularly at a bespoke level – is not simply about the an advisor writing down the stated objectives of a client and coming up with a plan. At its best, the interaction between adviser and client should be a genuine conversation – one in which the investor is encouraged to explore the options and evolve a strategy, rather than simply feeding in a prepared shopping list of objectives to a machine. Or to put it another way, a two way conversation allows the investor to discuss his (or her changing circumstances) and factor those into an investment strategy. What’s more, the strategy outcomes that the investor might have been seeking at the beginning of the conversation may well evolve during the briefing, because that’s the way conversations work.       

Equally important, having a personal (and very human) adviser means that someone is accountable for the advice, decisions and outcomes. This is hugely important.   

And that’s why the best wealth managers emphasise human interaction and the importance of relationship. In the case of The Route City wealth club, the relationship is built around the concept of Membership. Those who take advantage of the Route’s advice on wealth management and tax and who avail themselves of the bespoke investment opportunities on offer are very much part of a club. They are not simply clients.

It’s an approach that reflects a simple reality. Investment and financial management is important. It  deserves personal attention.

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