When compared to Robo-Advisors, human advisors are “out manned, out funded and out gunned, but you are not out trusted,” said Bill Winterberg of FPPad.
Winterberg spoke during lunch at TD Ameritrade’s National LINC 2015 conference on an overcast day in normally sunny San Diego. His presentation focused on how advisors can use trust and personalized relationship to differentiate themselves from Robo-Advisor competition.
I look at Robos as a welcome addition to the investment marketplace. What they’re doing is expanding the market and forcing human advisors to up their game. They’re raising the “table stakes” as Winterberg pointed out.
I firmly believe the most successful advisors in the future will combine the best of Robo technology with the uniqueness of human interaction. Michael Kitces calls this the “cyborg-adviser” while Joe Duran calls it the “bionic-adviser.” Regardless of the name, the result is the same–combining the best of both worlds.
Winterberg went on to say,
Trust is that differentiator that you can use to combat the aggressive attacks that you may receive because you are out manned, out funded and out gunned.”
Yes, trust is critical to an advisor/client relationship. However, the trust advantage humans enjoy today may be fleeting.
For example, millions of people have no problem trusting Amazon, Zappos or eBay. And, of course, many people are comfortable entering trades online or inputting their credit card online to complete a transaction.
Robo Advisors are still in their infancy and they certainly haven’t reached the level of trust as the premier brands mentioned above but over time, they may get there.
As another point to differentiate humans from Robos, Winterberg said,
What you can do today is focus on those relationships, that personal connection, whether it be face to face, or complemented with online or virtual resources, those relationships that you have with your clients are the way that you can change the landscape and deflect the aggressive attacks of the online service providers.
Your Robo Advisor is not going to hold your hand during the next bear market or prevent you from making behavioral investing mistakes. So yes, that personal connection is certainly one advantage humans have. Couple that with a strong CRM system, as Winterberg pointed out, where you can document everything you know about your clients and you have an advantage no Robo can match.
To me, it gets back to John Naisbitt’s concept of “high tech, high touch.”
Robo Advisors and human advisors each have what the other wants. True Robos have great technology but no human advice giving capability or deep relationship building ability, while human advisors can give advice and develop deep human connections but drool over the Robo’s cool technology.
And as I wrote in a post last year, “At some point in the future, like husband and wife, the two shall become one.”
Human advisors need to combine the best of Robo technology with the uniqueness of human interaction. Get ahead of the curve now and checkout firms like Betterment, Jemstep, Upside Financial and the multitude of others in the Robo space. Partner with one of them to add an online investment option to your human service mix.
If you don’t act now to elevate your services to at least match what the Robos are offering, “you might as well give up,” said Winterberg.
After Winterberg’s talk, I chatted with the advisor sitting next to me at my lunch table. When he discovered that I led the nation’s largest financial advisor coaching program for 11 years he asked, “What’s the biggest challenge advisors face in growing their business?’
My answer was simple, “Complacency.”
Once an advisor gets comfortable and starts earning a good living, it’s hard to change. Well, let me tell you, Robo-Advisors are your wakeup call!
Winterberg is spot on in saying compared to Robos, you are, “out manned, out funded and out gunned.” And with those odds stacked against you, the answer is not to try to beat them, it’s to join them.
Add a Robo component to your human offering. By doing so, you can widen your reach, help more people, and keep your business relevant for years to come.
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