Financial technology (fintech) companies, such as robo-advisors, are here to stay and financial advisors and firms that embrace rather than run from such disrupters will be the most successful in future, says Cary List, president and CEO of the Toronto-based Financial Planning Standards Council (FPSC).
“Professions, true professions, actually are the beneficiaries of taking their professions to the next level through disruptive technology,” says List, who spoke at the Advicent Innovation Summit in Toronto on Thursday. “But those [advisors and firms] who rely on their technical acumen or do the things that robos can do are going to be left behind.”
Most advisors are already embracing technology, whether they realize it or not, List argues. For example, robo-advice platforms, with their automated rebalancing and portfolio management, are an extension of financial planning software, which many successful advisors likely adopted when it first became available 20 years ago. Other fintech tools from client relationship management software to online calculators are also all useful to advisors as they help them to focus on more than numbers.
To take advantage of robo-advisors, advisors can treat these fintech tools as the information manager while the advisor him- or herself focus in on the relationship. Robo-advisors can provide quality assurance and consistency while the advisor manages the behaviour of clients. Similarly, robo-advisors may be able to gather information, but it’s the advisor who can best analyze and interpret what the client has said.
“We all know that each family and individual is unique,” says List. “The robo-advisor is not going to be able to figure that out.”
Technology, of course, can also empower clients. Many of the tools, websites and calculators available online are all a means by which investors can educate themselves about financial topics, which is a good thing. Says List: “I would argue that greater self-efficacy in a society is a good thing. Period.”
Having clients inform themselves by doing some research online will not lead to the demise of advisors, much as the launch of WebMD did not lead to the extinction of the medical profession. Instead, advisors can have a more in-depth and informed conversation with clients about their concerns.
“A better informed patient, a better informed client is going to result in better outcomes,” says List.
Much like doctors, advisors must figure out the “why” and “what” of the information clients provide — and embracing technology is one way to ensure they have the capabilities to have those discussions and that they stand out from the competition.
“Those that are adapting both at the senior level of a firm or the individual level are going to be ahead of the game,” says List, “[because they] see technology and robo-advice as an extension of the toolkit [and they] use technology to increase productivity, be more accessible, have quality relationship with clients and be the true trusted advisor for all of their clients.”
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