Today, we are hearing a lot about the rise of the “robo-advisor”— a self-service platform that give users a suite of investment tools for accessing and analyzing their financial information online. For some, it conjures up images of a future where technology replaces financial planning by humans, fundamentally altering the advisory profession as we know it. Should you, as an advisor, be concerned?

For many, the answer is “NO”. Advisors who have established strong marketing, sales, and service delivery models shouldn’t be worried by robo-advisors. Advisors without an online presence who struggle to engage prospects and clients over time should be worried. Both groups should be focused on how to learn from robo-advisors, rather than being scared of them. Advisors who are thoughtful and creative about this trend can learn from the so called robo-advisor and apply some of their innovations to creating a better experience for prospects and clients —whether it’s working remotely with clients or leveraging technology to better serve and engage clients. We want to discuss three things you need to consider to adapt to the changes in the industry.

Adopt New Technologies to Automate Processes

One of the key lesson is to adopt new technologies that enable investors to see all of their investments in clear and easy-to-understand graphics on any device at any time. With the robo-advisor, account opening, money movement to and from bank accounts, tax loss harvesting, and portfolio rebalancing are all reduced to a few clicks. This streamlining is their core competency and the foundation of all they do.

Advisors who successfully adapt can expect not only to retain current clients, but to attract the next generation of investors who expect immediate access to everything in an easy to understand display. This why client portal is now a trend. It keeps advisors and investors on the same page during an advisor presentation, or when they review the investment performance and make investment decisions together. And this trend will accelerate because of mobile devices. But is it not simply a matter of advisors using portals to play catch-up. Rather, it’s about taking client service to a whole new level

Create the Right Value Proposition to Differentiate Yourself

Because the robo-advisor operates online, they have worked to create good branding and clear marketing messages to demonstrate their value proposition to prospects and clients. Since their meeting place is online, it is their well-designed landing pages and platforms that proclaim their differentiation – Save time, Save money, Educate Yourself, and Invest better. They also offer greater transparency and accessibility. While technology isn’t the answer to every problem, there are certain functions that can be performed faster and better by software than they ever will be by human beings. However, delivering personalized advice isn’t one of them. People turn to their trusted advisors for obvious reasons: they have complex problems and they are confused by the marketplace. They need the help and support of professionals who can take the time to truly understand them. The best and most successful advisors are those who have developed a deep understanding of a client’s emotional drivers and life goals. 

With the right Value Proposition, advisor can focus on differentiating themselves and building a successful brand. Through your value proposition, you can help your audience to clearly identify the value you will bring to a relationship.

Develop an Effective Client Engagement Strategy

Although financial planning online platforms can’t offer a warm handshake and a cup of coffee while discussing the markets, they are still very effective communicators. They are able to deliver communications on a daily basis through multiple channels, including e-mail, blog posts, tweets, and client-messaging systems that allow them to “customize” messages to clients when clients log into their accounts. You may not be able to keep up with these platforms in terms of how often you communicate to clients, but the lesson here is that you can and should leverage technology in your marketing and service initiatives. This includes sharing quality content that speaks to your target audience, figuring out what they are interested in, and taking the time to build engagement into your overall marketing and service plans.

For the industry, the robo advisor is a disruptive element causing change that’s generally for the good. With all change, some people are slow to adapt and some people adapt well. It’s all about framing. Do you see opportunity or do you see a threat? So advisors, don’t worry about the robo-advisors. Learn from them and continue to grow and adapt your business to the changing environment.