Why There is Much More Value in Using a Financial Advisor
The fear that robots will take over our human jobs is not a new and novel fear. At present day in the financial planning and investment industry, the use of robo-advisors is skyrocketing. A robo-advisor (sometimes called “robos” for short) is an online wealth management/investment portfolio management service that provides users with algorithm-based, automated investment advice and recommendations without the use of a human financial advisor. Robo-advisors offer negligible if any human interaction and instead offers portfolio management using computer models based on the user’s responses to its basic online goal and risk assessment tools and questionnaires.
Robo-advisors are popular because they are a step-up from DIY portfolio management online platforms but are typically both cheaper than most full-service human financial advisors and have lower account minimums than most traditional financial advisors require.
While industry media is all abuzz about robo-advisors and it’s true that robo-advisors are competition for a traditional human financial advisor, financial advisors for the most part still hold a definitive edge over robo-advisors. It all comes down to communicating our value as a real-life, living and breathing human financial advisor.
Here’s just a sampling of some of the things that only a human financial advisor and not a robo-advisor can do for their clients:
- Guide clients though unexpected or significant life events and show them how to gain control of their current financial snapshot and financial future
- Evaluate the client’s investment and financial planning priorities in the context of complex family histories
- Answer difficult questions involving time-sensitive and emotionally-taxing decisions
- Apply a fiduciary standard to their investment and financial planning recommendations
- Point out and analyze unusual portfolio risks and opportunities and explore alternative routes when appropriate
- Explore a wide spectrum of investment choices with the client and avoid defaulting to standard, off-the shelf index-based investment products
Be sure to check out an upcoming post on this blog that discusses how financial advisors can strategically position themselves to grow their client base from people who have outgrown or are unhappy with their current robo-advisor investment portfolios.
For more information on Summit Brokerage Services, our first-in-class services, and making the transition toward becoming an independent financial advisor and growing your practice, visit https://www.summitbrokerage.com or call us at (800) 354-5528.
About Summit Brokerage Services
Summit Brokerage Services, Inc. is part of Cetera Financial Group®, a leading network of independent retail broker-dealers. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.
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 As discussed in the previously published Summit Brokerage blog entitled “5 Common Myths about Financial Advisors Debunked”, it is a widely-held myth that financial advisors are only for rich people. This is not true. Research data from Cerulli Associates and Meridian IQ, which is the world’s premier registry of information on financial advisors, found that the largest category of financial advisors — independent broker-dealers — had an average client account size of just $78,469 and small RIA firms had average client account sizes of just $65,447.