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How to Use Robo Technology Without Diminishing Your Own Value

Robo advice threatens to lower your value in the eyes of clients. Here’s what you can do to prevent that.

By Gary Manguso

The rise of financial robo technology sounds like a bad sci-fi movie, doesn’t it?

Yet, robo advisor platforms are quickly becoming one of the most practical, and realistic ways to connect with modern investors – warranting serious consideration from any advisor who aspires to remain relevant in a competitive industry.

Used correctly, automated investment advice can help advisors scale their businesses more effectively and better align with an emerging generation of investors. However, there’s a fine line between using robos to advance your investment expertise and diluting the value of human-led guidance.

Robo advisors have been met with skepticism from some advisors. Many have taken a “wait and see” approach; however, some potential clients have met these innovative technologies with open arms, bringing an end to the wait-and-see game for advisors. Advisors now face the challenge of successfully incorporating robo technology into their practices without diminishing their own value. To help advisors position their robo technology correctly, I’ve included below my top tips on incorporating new robo technology into advisory practices.

Private Label Your Solution

There is no excuse for not offering white labelled options. You should demand it from your technology provider. Your brand is your business, and the ability to deliver a seamless brand experience throughout the investment process is essential to communicating your value. As the initial touchpoint with prospective clients, robo advisors should clearly represent your business. Without a cohesive investment experience, your value becomes compartmentalized to conventional investment advice.

Ensure Investment Flexibility

Just because you’re using a digital tool to onboard entry-level or tech-savvy clients doesn’t mean your core investment philosophy isn’t important. As humans, we love a good story. The ability to instill yours into a digital advice solution is essential to creating a fundamental connection with each investor. When choosing a robo platform, be sure that yours gives the flexibility needed to align investment decisions and methodologies with your unique philosophy.

When implementing a robo platform, be sure to communicate that philosophy in every touch point.

Use a Hybrid Approach

It’s important to think of your robo advisor as a tool, not a standalone solution. Clients enjoy the simplicity and control of automated technology, but in times of uncertainty or stress, dedicated guidance is still king. Make sure each investor understands the dynamic between you and your technology. Educate them on when your advice is most useful, and show them how to contact you in times of need.

Think Long-Term

Robo advisors are great entry-level tools for educated, tech-savvy investors, but as wealth is amassed and goals are changed, the client’s needs will change with them. This is your opportunity to educate investors on the long-term considerations of investing, and how your robo solution fits into that journey.

How easily can your clients transition from an automated relationship to a conventional one? Make sure each client understands how to best leverage their relationship with you.

Instill Complete Transparency

What’s the best way to show your value? Visibility. Make the investment process completely transparent – from investment selection to your quarterly reports. Help clients understand your billing structure, how your investment recommendations are generated (important because this is likely automated), and how your investment philosophy is instilled into each allocation. Don’t leave anything to guess-work. Show your work, which is easier done when your robo solution is integrated into a robust reporting tool. 

According to the World Wealth Report, 86.7 percent of high-net-worth investors under 30 are willing to use automated advisory services (robo-advisor platforms). Add that to the 68.9 percent of investors aged 30 to 39, and 43.1percent of those aged 40 to 49, and you can easily see the opportunity is real. Clearly, robo advisors are no longer innovative ideas of the future. They are a practical tool, perfect for strengthening advisor value. The key is taking the steps to effectively leverage and communicate that value. Those that do will stand apart, not just in experience, but long-term success through client loyalty and satisfaction.

Gary Manguso is the Vice President-Product Strategy at FTJ FundChoice.                                                                                       

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