Digital wealth-management services, or robo-advisors, are becoming a staple of mainstream investing. Not only are they offered through relatively new firms such as WealthSimple Financial Inc., but bigger, established institutions such as Bank of Montreal have also rolled out robo-advisor services.
Now that robo-advice is becoming more prevalent, your clients might start asking: “Why should I work with you and not a robo?”
First, don’t panic. Instead, think of the skills you offer as a financial advisor and what sets you apart from a robo. There are several compelling arguments that support your clients sticking with you.
Here are some answers you can provide:
> I can handle complex investment issues
While simplicity might be one of robo-advisors’ biggest selling points, there is value in your ability to take a more nuanced approach to advice.
“[If a client] has really complex financial planning needs, above and beyond strictly portfolio management, that’s when working with a human is great,” says Shannon Lee Simmons, founder of the New School of Finance, a fee-only financial planning firm in Toronto.
Adds Evan Thompson, business coach at Evan Thompson and Associates in Toronto: “Advisors can really help clients home in on important decisions that robo-advisors can’t.”
> I can be “holistic”
Highlight your ability to take a “big picture” approach. As a traditional advisor, you can factor in other components of your client’s life and needs, such as his or her marital status, career aspirations and retirement goals. By knowing your client on a human level, you can develop a deep relationship that goes far beyond managing investments.
> I have the capacity for empathy and trust
Your ability to empathize with your clients and earn their trust is one of your strongest selling points over a robo-advisor.
While robo-advisors have the ability to construct portfolios, Thompson says, no client invests in a vacuum. Even clients who use robo-advisors get their advice from humans in one way or another.
“If they don’t get their advice from humans [in person],” Thompson says, “they get it online, or from columnists — real people expressing opinions. It’s very hard to sign your confidence over to an inanimate object.”
> We can negotiate rates
While robo-advisors are an inexpensive alternative, they have a strict fee schedule. You, on the other hand, can tailor your rate structure based on your client’s needs and assets. For high net-worth clients, this flexibility can be particularly appealing.
> Why not a combination of both?
You might recommend that a client work with you and a robo-advisor. As a traditional advisor, you can focus on your client’s goals and changing financial planning needs, while the robo-advisor handles straight investments.
“Robo-advisors can come into play in taking raw data and building portfolios,” Thompson says, “so the advisor can focus on the qualitative and emotional side of investing.”
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