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As robo-advisors present a growing threat to traditional financial services firms, financial advisors should find ways of using these tools in their practices and focus their efforts on services that cannot be replaced by technology, according to several investment industry insiders who spoke at the Independent Financial Brokers of Canada’s (IFB) Spring Summit in Toronto on Thursday.

“[Robo-advice] is going to become more and more prevalent,” said Chris Ambridge, president and chief investment officer at Provisus Wealth Management Ltd. and president of Transcend Private Client Corp., an online platform and a subsidiary of Provisus, both based in Toronto.

Ambridge pointed to recent statistics from Strategic Insight showing that assets under management at Canadian robo-advisors jumped by 44.6% to $1.07 billion at the end of the first quarter (Q1) of 2017 from $743 million in the fourth quarter (Q4) of 2016. During that same period, the number of accounts surged by 56.1% to 46,149 from 29,572, while the number of clients rose by 55.2% to 33,757 from 21,752.

The size of those accounts, however, is shrinking. At the end of Q1, the average account size was $23,274, down from $25,126 in Q4 2016.

Nevertheless, research suggests that a growing number of clients are choosing robo-advisors over traditional advisors. Ambridge presented the results of a recent survey showing that 30% of investors believe robo-advisors do a better job than human advisors, and 72% of clients under the age of 40 said they are comfortable working with virtual advisor.

But it’s not only millennials who are making the switch. The average age of a robo-advisor client is 44, Ambridge said: “You would think it’s all millennial people who are just starting off, but it’s not.”

In addition, the survey shows that of the affluent clients who had switched firms in past two years, 45% went to a robo-advisor.

The shift to robo-advisors is being driven in part by consumers’ growing preference to transact digitally, but also by a lack of trust in the financial services sector, Ambridge said. In fact, 70% of the clients surveyed said they question the trustworthiness of financial services professionals.

“Trust in financial services is not at an all-time high,” he said. “In fact, it’s pretty low, quite frankly.”

For advisors, this means that taking the time to build solid relationships and earn clients’ trust is more important than ever, Ambridge said.

Instead of viewing robo-advisors as a threat, advisors should focus on the factors that differentiate them from those online services, countered Ron Fox, chairman and CEO of Toronto-based Glidepath Portfolio Services Inc.

Read: Advisors could learn from robo-advisors’ communication efforts

“The human financial advisor is not going anywhere,” he said. “Technology cannot replace you, because the reasons why people value your service have nothing to do with technology.”

Specifically, technology could never replace the empathy and reassurance that clients get from their advisors Fox said. However, he noted that advisors can use technology to improve the services they provide.

“Technology is facilitating customized and enhanced levels of service that weren’t accessible to most in the past,” said Fox.

Specifically, advisors should utilize technological tools to help with tasks that can be done more quickly and more affordably by computers, such as asset allocation and systematic portfolio rebalancing, Ambridge said.

“Don’t spend a lot of time on things that computers can do better,” he said. “All you’re doing is wasting your time.”

That allows advisors to focus on the value-added personalized advice that computers cannot offer, such as comprehensive financial planning, tax planning and helping clients build a legacy, he said. Advisors should also strive to offer a variety of different asset classes and products to differentiate their offerings from those available online.

Embracing technology to automate some of the administrative tasks that previously consumed advisors’ time and resources can also help advisors be more profitable, added Robert Frances, chairman and CEO of Montreal-based Peak Financial Group.

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