Never Replace Human Financial Advisors
We are in the age when artificial intelligence is gearing to take over everything, from the transport industry to medicine to politics to economics. And while the technology is still in its nascent stages in most of these fields, it is making groundbreaking advancements in the financial industry.
Thanks to machine learning, a subfield of AI, computers can now think like a human financial advisor. But can they replace them? A good number of industry analysts believe so, but others like me are not convinced.
While there is no doubt that machine learning and AI are revolutionizing the financial industry, it is doubtful that they will render human advisors jobless. Instead, they are …show more content…
First, a purely robotic investment approach eliminates human touch which studies show to be crucial in the investment process.
A recent global investment survey by Legg Mason Asset Management shows that 60% of investors believe that human touch in investment is not only necessary but can never be replaced by technology. According to the study, both millennials (53%) and baby boomers (65%) prefer investment services where they can interact with a human advisor.
The study concludes that while robo-advisors have a significant role to play in investment, they can't-do it alone, and must, therefore, be accompanied by human advisors.
Apart from the human touch aspect, robo-advisors cannot provide highly customized and holistic financial planning. As Steven Elwell, a partner at Level Financial Advisors notes, robo-advisors can help investors make some tailored decisions by their reported risk profile buy they cannot go into …show more content…
However most also prefer a one to one interaction with a human advisor which gives them the psychological satisfaction of feeling that they are in control of their investment. A hybrid approach allows the investor the benefits that come with a robo-advisor and those that come with a human advisor.
In a recent interview with Wall Street Journal, Morgan Stanley CEO, James Gorman, notes that a purely robotic investment approach is nowhere near taking over the financial advising industry.
According to Gorman, most of his firm’s 3.5 million clients prefer to talk to a human financial advisor especially on complex investment topics such as estate planning and taxes. He indicates that his bank is still considering rolling out a robo-advisor later this year targeting investors with small and simpler portfolios.
It, therefore, goes without saying that in modern-day investing, a robo-advisor is a must-have tool for financial advisors who are looking to remain