4 Tips to Take Back Business From Robo-Advisors

 4 Tips for Financial Advisors to Lure Investors Away from Using Robo-Advisors

Financial Advisors over Robo AdvisorsAs discussed in the previously published Summit blog entitled “Humans vs. Robots: The Value of Using a Financial Advisor Over a Robo-Advisor,” the use of robo-advisors is becoming increasingly popular. Just to recap: a robo-advisor is an online wealth management/investment portfolio management service that provides users with algorithm-based, automated investment advice and recommendations without the use of human financial advisors. Robo-advisors offer negligible if any human interaction and instead offers portfolio management using computer models based on its user’s responses to its basic online goal and risk assessment tools and questionnaires.

People who use robo-advisors often cite benefits of robo-advisors over traditional, human financial advisors such as: lower fees, lower account minimums, better websites and online user experiences, and increased convenience and time-efficiency. While these are all compelling reasons; with many robo-advisor users, there will come a point where a critical asset mass is reached: financial planning responsibilities will increase and the level of risk becomes increasingly unacceptable as investment portfolio variables exponentially grow over time. In other words, many robo-advisor users will outgrow their robo-advisor and will be looking to transition to a human financial advisor who can provide a more sophisticated degree of investment and financial planning oversight and guidance.

If you are a financial advisor looking to attract new clients, people who have outgrown their robo-advisors can be a significant source of potential new clients. Here are four ways financial advisors can position themselves to attract a new client base out of investors who have outgrown their robo-advisors:

1.) Point out your access to alternative investments and a variety of asset classes: Robo-advisors don’t offer a large variety of asset classes to users. The robo-advice model leaves out actively managed mutual funds and a massive world of alternative investments and asset classes such as precious metals, real estate, and hedge funds, just to name a few. As a financial advisor looking to attract current robo-advisor users as clients, emphasize your access to this vast range of asset classes and alternative investments.

2.) Increase your fee transparency: Robo-advisor users cite the lower costs and transparent pricing structure as a main benefit of robo-advisors over human financial advisors. To recruit current robo-advisors as your clients, you must increase your fee transparency with clients. As stated in the previously published Summit blog entitled “Gain Trust and Avoid Conflict: Fee Transparency for Financial Advisors,” to establish more trust, you need to be more upfront with your clients about the fees they are being charged for your professional services. In fact, a financial advisor’s fee value proposition—what the client thinks the value of the services they are paying for is—is directly correlated to fee transparency.

3.) Offer the latest technology to your clients: Robo-advisor users are tech-savvy. If they are going to make the switch to a human financial advisor, they will expect him or her to also be tech-savvy and incorporate the latest technology into his or her practice. As such make sure you offer the latest technology to your clients that increases convenience and saves time. Such technology offerings may include but are not limited to data aggregation, online portfolio construction tools, and screen-sharing teleconferencing capabilities.

4.) Amp up your online presence: As mentioned above in Tip #3, people who use robo-advisors are tech-savvy and are comfortable operating in an online sphere. To keep from seeming like a luddite, you need to join this online world. Amp up your social media game. Have an appealing, easy-to-navigate practice website with an SEO-enabled blog. For the most part, the dialogue about robo-advsiors is happening online; if you want to know what they’re saying, you also need to be actively engaged in this online world.

For more information on Summit Brokerage Services and our independent financial advisors, visit https://www.summitbrokerage.com or call us at (800) 354-5528.


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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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