Robo-Advisory Industry Trends

At a recent Jump$tart Coalition Partner’s Meeting, Chris, Lee, the Connecticut State Coalition leader and a financial advisor, spoke about trends in the robo-advisory industry. “Robo-advisor” is the term used to describe digital platforms that provide automated financial planning and investment advice. The advice is generally driven by algorithms with little or no human interaction. Clients complete an online survey on which advice is based.

Some future predictions for robo-advising are as follows:

¨     Large non-financial firms (think Google and Amazon) will enter the robo-advising field as they have already done in many others (e.g., Amazon’s purchase of Whole Foods supermarkets in 2017).

 

¨     Artificial intelligence will be increasingly integrated into robo-advising platforms so that they will become more “human-like” and appealing to consumers.

 

¨     There will be increased government regulation and “fee compression” and profit margins for advisors will be squeezed. Lower fees will increase access to financial advice for lower net worth and younger investors.

 

¨     There will be new technological advances (e.g., a “real time” analysis of the cost of buying something with minimum payments) and more mobile-friendly platforms.

 

¨     Increased blending of human financial advisors and technology components in a “high-tech and high-touch” combination of services. Human advisors can help people keep their emotions in check and stay on track.