Wealth Management Solutions

Tuesday, 04 March 2014 00:00

Robo, human advisors and Millenials can live happily!

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There is some concern that the emergence of “robo-advisors” may pose a competitive disadvantage and will ultimately change the playing field for more traditional advisors as millennials in particular; will tend to choose more technology-centric services that directly connect investors with suites of analytic tools to create financial plans over traditional advisory practices.

MWI-Blog-02It is expected that young professionals or millenials with busy lives will gravitate to robo-advisors services for initial data gathering and for introduction to the value of basic investment advice. It is certainly a plus that some of the new services being deployed are accessible around the clock and, may be considered by younger, busy investors as more consumer-friendly. For many younger investors, robo-advisers will also provide an initiation into the value of essential investment advice and encourage them to develop good financial practices and, to think through the importance of a savings program or planning. On the other hand, as millenials mature and accumulate more assets, they will require human Advisors who can help guide them through more comprehensive planning. They will look for human advocates and a hub for all of their financial needs. Recent studies have shown the areas that are important for this group requiring face-to-face time or more personal communication:

  1. Retirement planning. Retirement funding is the most important for them. Serious about careers and their future; they stayed the course and continued to invest in 401k plans even during the recent market downturns.
  2. To understand their Risk profiles: many are more conservative, small buckets for more aggressive investing, different risk tolerance for different accounts. This group is about capital preservation – solid advice is key.
  3. Need help to attain certain Goals: short term liquidity cash flow
  4. They are open to introductions to (human) Advisors from friends, family.
  5. Preferred advisor characteristics: they look for experience, teams (grey hair but also someone who is of the same generation), a firm that is associated with a large custodian is important.

Robo-advisers will not replace human advisors. Advisors should embrace these new technologies and any technology that enhances the value of financial planning and ultimately help advisors deliver better services to clients. Technology, when deployed strategically can be a positive disruptor in the way advisors interact with clients. The rise of social networks, video conferencing and the likes are all tools that can certainly be utilized by advisors to communicate with clients. This is an exciting time for the Financial Planning field.

Last but not least, though the above does not address the fee pressures, Robo-advisors are expected to continue to offer lower fees than traditional advisory practices setting an expectation for personalized fees from human advisors as well.

Jose Pierre

José Pierre, founder and CEO of Marketware International Inc., leads a firm that provides strategic consulting to both top-tier multinational financial institutions and their vendors as well as turnkey solutions for global trading and portfolio management.


José Pierre founded Marketware International in 1995, based on a vision of developing technology platforms for secure, cost effective, high volume online trading and portfolio management. By 1997, TD Waterhouse, Royal Bank of Canada, CIBC and other top-tier North American firms were clients. In 1999, TD Waterhouse acquired Marketware and Mr. Pierre, as SVP for International Technology for the TD Waterhouse Group, directed the development and delivery of high volume, local securities trading platforms throughout Europe and Asia.

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