How to Compete (And Win) Against Robo-Advisor 3.0

By H. Adam Holt, CFP, ChFC

In the beginning of the robo-advisor movement, digital-only wealth management services offered a pretty simple value proposition.

Consumers could get low-cost, “set it and forget” account rebalancing, and that was basically it. The value pitch for a financial advisor against that kind of limited offering was straight-forward and simple.

But robo-advisors have grown and adapted. As more entrants have flooded the market, some offer on-call financial advice by CFPs. The added value that can be provided by a financial advisor becomes much more important, and nuanced, to explain.

As the third wave of robo-advisor evolution ties financial planning more closely to investment selection and robo-advisors continue to add more valuable services, like high-yield cash accounts and insurance solutions, advisors also have to adapt their approach in how they communicate their value.

Explain That All Financial Advice is Not Created Equal

As the industry as a whole pivots more toward comprehensive planning, the financial advice that advisors offer is coming more to the forefront for everyone.

As an advisor who may from time to time need to sell services against a robo-advisor, either to attract new clients or retain existing clients, they have to demonstrate that the advice provided is superior to the advice given by a call-queue CFP at a robo-advisor.

While it may seem like the two do not compare at all, the robo-advisor model and the technology behind it can certainly be attractive to some consumers, especially for clients who may want a lower level of service from their advisor.

As an action step, each advisor needs to take care to get to know their clients better and to create a true process that can be shown to prospects that clarifies why a close relationship can ultimately lead to desired outcomes. Because financial decisions tend to have long-term impacts, revisiting those decisions with an advisor who helped make them years ago, can have a confidence-building effect.

Keep Your Tech Up to Date

In addition to demonstrating superior service capabilities, advisors also have to continue to match technology eventually against robo-advisors.

As the next generation of investors who have grown up with apps like Robinhood, Personal Capital, Mint, and even tech like the new Apple credit card, rise to prominence, this value will become ever more critical.

Consumers have a certain level of expectation for the technology they use now, regardless of where it comes from. They want to be able to access accounts digitally, but more than that they want to interact with their plans as well.

The reality is that clients working with an advisor are seeking to be engaged around their current financial condition and their progress toward priorities. Some may require full access to their accounts, however many consumers still prefer a human soundboard when working on their financial planning. The tactical execution is fine for digital, but the strategy is still very human.

Put simply, a digitally-enhanced client engagement experience is a big part of a defense to robo-advisor 3.0.

Bring Tech and Advice Together with Asset-Map

Asset-Map Platform gives you a simple way to keep clients engaged with their plans in a collaborative way, both online and offline.

Here’s just one example: In meetings, you can clearly draw a line (literally, if you want) to show how your recommendations for structuring your client’s financial portfolios can impact their entire picture.

Just print off an Asset-Map that your client filled out prior to coming in, grab a pen, and get to work with a visual and interactive discussion.

Online, advisors can selectively share their screens remotely to view progress toward financial priorities using Target-Maps and make suggested tweaks. Keeping one’s Asset-Map (and advisor for that matter), up to date is a great way to make sure that there is intentional effort behind financial well-being. Creating a feedback loop between advisors and clients is critical to making better decisions.

Robo-advisors have evolved since their inception, and while they aren’t the threat they were once considered to be, advisors can continue to stay ahead by demonstrating invaluable personal advice tied together with great technology experiences.

Discover how you can innovate your client experience. Click here to get a worksheet to help you understand each phase of your customer journey.