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A Relationship or a Robot? There’s a Place for Both

A Relationship or a Robot? There’s a Place for Both

It’s remarkable just how much technology is changing the way advisors do business. At its core, the advisory business is still a relationship business, and what distinguishes the best advisory firms is still their ability to connect with and provide tangible value to their clients. Technology, which once used to be relegated to the back office, is now rapidly becoming table stakes for not only how advisors run their firms but, more significantly, how their clients expect to interact with them. It’s fascinating to watch technology move to center stage as a critical part of helping investors communicate with their advisors, and have clarity and confidence in their financial future. A key player in this shift has been the robo-advisor.


The emergence of robo-advisors speaks to a growing expectation from investors for anytime, anywhere access to their financial advisors, human or not. While it’s unlikely that a robot will replace the kind of relationship advisors provide, it’s already a reality that investors expect an elegant blend of a relationship with the ease of a technology to allow for engagement on their own time.


Selecting an advisor is sort of like choosing a place to live. A one bedroom apartment is not the ideal solution for a family of six with a variety of different needs. Similarly, today’s robo advisor platforms provide a relatively basic form of advice, focusing only on investment allocation and not on guidance that investors may need for broader financial planning goals such as college funding, retirement, and tax or estate planning. The robo or online advisors have been particularly appealing to Gen X and Gen Y’ers as a cost-effective way for them to invest and get started with a diversified investment strategy. Investors with more complex financial needs need more than that and often turn to a relationship with a trusted professional. But the old school mindset of long meetings in the advisor’s office and taking notes on a yellow pad of paper isn’t enough for today’s investor who has high expectations. These investors turn to professional advisors who can provide them with both a relationship and the benefits that technology can bring to transparency and communication with their advisor.


Technology is not only important for capturing the next generation of investors but also for retaining and enhancing existing relationships. As it is becoming increasingly fundamental in the daily life of investors, there is an opportunity for RIAs to capitalize on products in the marketplace to address their technology gaps. It’s an imperative to staying competitive.



Dave Welling is the SVP & General Manager of Black Diamond, a business unit of Advent Software, Inc. Dave directs Advent’s strategy in the advisory market and leads the Black Diamond team.