Should we use Robo-Advisors? I don’t know, let’s ask Siri!

One thing on psychology, which we’ve always known, is that every investor says they’re long-term – and they are until the market takes a hit.

-Steve Forbes

Any web search for “robo-advisors” (or robo-advisers, robo-planners, etc.) produces an interesting spectrum of content, from “for” to “against,” with a fair share of “undecided.”

Robos, good or evil?

We recently re-blogged Robo Advice? Bring it on, it will be great for business
by Tony Vidler.  He says robo-advisors:

“will be good for business for those advisers who provide real value and are smart marketers.  The Robo’s will probably kill off the bottom-feeders in the business, together with those who have no genuine advice-based value proposition.  Perhaps that is an unfortunate consequence, but then, maybe it isn’t.”

We also reblogged Neil Wood’s post “Are You Prepared For the Tidal Wave Of Assets Going Into Robo-Advisor Programs?”  He says:

“Remember the stock jockeys of the 1970s-1990s that refused to embrace financial planning?  Many call them dinosaurs that died with a change in the way our industry did business.  There will always be new competitors in our industry.  People want faster, cheaper, better, improved, more powerful and a so-called better mousetrap.”

Threatened or embracing change?

Many posts are threatened by new technology.  For example, the title alone in the post by Sara Grillo puts robo-advisors in a derogated status:  Why a Robo-advisor is Like Getting Financial Advice at a McDonald’s Drive Through.  More on Ms. Grillo in a minute ….

Here is another, where the title of the article by Craig Iskowitz sounds as if he thinks robo-advisors are a passing fad: Dead Robo Walking: Why Wealthfront is Doomed.  However, he provides real analysis of the new technology and differentiates the growing field of robo-advisors, calling out Wealthfront as an advisor he believes failed to prepare and execute well.  Wealthfront may not do well, but Mr. Iskowitz sees it as losing out to other investment firms, both robo or traditional.  (Also see Robo-Advisors may be just what we need!)

Finally, there are some who purport to be threatened but may in fact be carving out their own turf in the robo-advisor space.  Ron Lieber believes that is what JP Morgan is doing.  See “Jamie Dimon Wants to Protect You From Innovative Start-Ups.”

As I said in What is a financial plan?, that those who insist that robo-advisors will not replace individual, human planners comprise the “There’s no app for that” group.

Hold on, Steven.  This is Siri.
What about me?  Where do I fit in?

Well Siri, you are a robo-voice, not an advisor.

But you ask me questions all the time!

Yes, I do.  But I don’t count on you for life-changing decisions!

I’m hurt!

Enough!  As promised, back to Sara Grillo.  In the end, she thinks robo-advisors:

“are a good way to get financial advice for those who have no emotion attached to their money, a long time horizon, and simple requirements.”  However, if you need more attention, then she expects you to pay a human for advice, despite the $500,000 portfolio minimum threshold barrier.

Should that be the cutoff?  You have to already be wealthy to get good advice?  We think it shouldn’t.

Imagine that, as a financial planner, CFP or other advisor, robo-advisor technology frees up more of your time.  You could use that time to provide more advice to clients or to advise more clients.  Just like the introduction of word processing and desktop computers in offices decades ago, technology brought efficiencies and created a massive shift in how we use time.

Or Imagine that we can create a robo-advisor website that will provide the sort of advice that a human would, even encompassing the issues Ms. Grillo suggests: “complicated trust and estate issues, a need for cash flow planning.”  This is my hope for the website we are
building, that we can make the essence of human financial planner advice accessible to those who made need it most, who have not amassed great wealth – yet.

Technological change comes in many forms and constantly evolves

Change is a constant in our lives.  Those who resist are often buried in the process – Neil’s dinosaurs.  Those who would adopt and adapt fare far better.

Don’t you agree Siri?  Siri?

I’m not talking to you until you apologize

Oh boy.

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