Can You Compete With Robo-Advisor?
Take a walk down Main Street in any town, and you will notice a few things are missing. Remember the video rental store on the corner? Online video streaming pushed it out of business back in 2011. Need to use a pay phone? You’re outta luck.
And that impressive-looking edifice on the town square? That used to be a bank. You do remember what a bank was, don’t you? That place with the nice friendly folks who stood behind a counter and smiled at you while they accepted your check for deposit in that maximum-security vault behind them. Online banking, direct deposit and ATMs forced it to close its doors as well.
The part about the bank closing down might be surprising but it really should not be. A Bankrate.com report released earlier this week showed that three in 10 Americans had not visited a brick-and-mortar bank in six months. The Wall Street Journal reported that bank branch closures in the U.S. last year hit the highest level on record so far, with banks eliminating a net 1,487 branch locations last year, according to SNL Financial.
Technology is expected to eliminate as many as half of American jobs over the next two decades, according to Oxford University researchers. For example, some predict that it won’t be long before driverless cars and drones eliminate the need for taxi drivers and delivery persons.
A big question in all of this is: Will the financial advisor go the way of the bank teller or the video rental clerk? The Oxford researchers said that personal financial advisors face a 58 percent risk of having their jobs fall victim to mobile robots and “smart” computers.
I know — we’ve all heard some variation of this ever since the Internet became a part of daily life. Online retailers such as Esurance and Geico were supposed to force P/C agents out of business, but those P/C agencies haven’t taken down their shingles. Nobody would want to sit down with a life insurance agent when they could go online to buy term insurance, but life agents are still setting appointments with prospects.
We can argue that the Internet didn’t eliminate business, but it did change the way advisors conduct business.
Last month’s T3 Technology Tools for Today conference brought together the top technology vendors in the financial planning arena and one of the topics discussed was: what is a flesh-and-blood advisor supposed to do in order to compete with “Robo-Advisor?”
The answer: Use technology to enhance the client experience instead of trying to compete with that technology. As one of the conference speakers said, “Turbo Tax did not ruin CPA practices, and WebMD did not put doctors out of business, so why would technology devastate financial advisors? It won’t, as long as advisors embrace technological innovations to enhance their value to clients.”