I'm talking specifically about the robo-advisor movement. For nearly two years, the financial services industry, and the media that cover it, have been obsessed with these online investing platforms. While there's a lot of hype, too many advisors are ignoring what the new technology really means.
Robo-advisors have already gathered more than $19 billion of assets. And some forward-looking "traditional" advisors have begun integrating them into their businesses—letting the robos handle automatable tasks such as asset allocation and security selection, as well as the more mundane operational tasks, reallocating those resources to a better client experience.
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Those advisory firms have come to understand that robo-advisors can do these things just as well as they can, at lower cost. By using them, advisors can free up time to focus on value adds such as tax advice and estate planning. Moreover, computers can rebalance and tax-loss harvest far better than any human, offering enhancements that most advisors fail to provide.
But plenty of advisors have their heads in the sand. In a recent survey by consulting services firm Accenture, just 19 percent of U.S. and Canadian advisors said they see robos as a serious threat. A full 40 percent say they pose no threat at all.