Technology and strategy can transition your business for the future

While the number of robo-advisors, or automated financial guidance, in many parts of the world is increasing for those seeking low-cost financial advice, it doesn’t spell the end of human financial advisors.

In many cases, financial advisors can strategically apply technology to their business model and complement or expand their client services. Done well, this could answer many clients’ concerns about working with an advisor — and edge out robo-advisor advantages.

There seems to be a preference for “combining the personal and trustworthy touch of an advisor alongside cutting-edge technology,” said MDRT First Vice President Regina Bedoya, CLU, ChFC, of Juno Beach, Florida.

In fact, according to a recent MDRT study, only 5 percent of people felt financial planning should be managed entirely by technology-based tools. The study, commissioned by MDRT and conducted online by The Harris Poll, surveyed more than 2,000 U.S. adults. The majority of respondents (88 percent) want technology to complement, not replace, a human financial advisor.

The benefits and concerns of working with a human advisor

See the full graphic on mdrt.org

The top benefits cited in the MDRT survey for working with a human financial advisor over a robo-advisor were the following:

• The opportunity to build a trusting relationship (65 percent)
• High level of human interaction (58 percent)
• Ease of communication (52 percent)

The concerns of working with a human advisor are the following:

• Cost (47 percent)
• Response time (32 percent)
• Accuracy of assessments (31 percent)

Benefits and concerns with robo-advisors

The top benefit of working with a robo-advisor over a human advisor, according to the MDRT survey, is a minimized risk of human error (49 percent).

The main concerns are

• Lack of two-way conversational communication (58 percent)
• Minimal human interaction (48 percent)
• Breach of data — including personal (46 percent) and financial (44 percent)

“By keeping advisors abreast of client desires and technology’s ever-increasing capabilities, MDRT stands poised to assist advisors in ushering in the future,” said Bedoya, who will be the 2020 MDRT President.

Generational preferences

When it comes to hiring a financial professional or using technology, about 52 percent of millennials (ages 18-34) surveyed by MDRT would trust a robo-advisor to effectively manage their financial plans.

Only 24 percent of Americans age 45 and older are likely to trust a robo-advisor to effectively manage their financial plans. And 44 percent of those age 65 and older say there is no benefit of working with a robo-advisor over a human advisor.

Technology as tools

The majority of clients of all ages appreciate their advisors using technology to effectively manage their business.

They like technology-based tools for

• Scheduling appointments online
• Hosting virtual meetings
• Storing client plans on the cloud for easy access

For more information about efficiently using technology, read how financial advisors are integrating technology into their practices and embracing digital solutions for clients. 

For more about how technology could change the financial world

• Read about cryptocurrency in “Don’t be cryptic.”
• Read “Gaining a competitive advantage” about how one MDRT member uses technology to save some of his clients thousands of dollars and his staff time.
• Watch “Future crunch,” from the 2018 MDRT Annual Meeting, which discusses how we can use technology and information to seek inspiration and change. (MDRT members only)
• Read “When clients want to discuss cryptocurrency and you don’t know anything about it”
• Watch “Digital leadership and innovation,” from Erik Qualman’s MDRT 2018 EDGE presentation (MDRT members only)
• Read “Leveraging technology,” a 2017 Annual Meeting presentation about increasing office efficiency (MDRT members only)
• Read “Protect yourself from cybersecurity threats”