According to the latest research from Cerulli Associates, “U. S Retail and Investor Advice 2015: Aligning with Investors Goals”, digital advice tools should be seen as an opportunity, not a threat for the traditional advice market in the United States.
“Many industry stakeholders assume that ongoing advances in digital advice platforms will empower investors to handle their financial affairs without the assistance of traditional financial advisors,” states Scott Smith, director at Cerulli. “We believe that while technology innovations will transform how services are delivered, there will be an ongoing, and potentially increasing, demand for personalized financial advice delivered by humans.”
The report focuses on the relationship between investors and financial services firms, and also examines how investors choose their providers, segmenting investors into those who use an advisor, and those who invest through direct providers.
Most households in the U.S. do not have the fundamental understanding of financial topics that allows them to feel comfortable making decisions solely by themselves. An increase in the availability of online tools to help these investors explore their options will drive demand for personalized advice as investors gain a greater understanding of the vast inputs affecting their long-term outcomes.
“Instead of seeing digital advice tools as threats, traditional advice providers will be better served by adopting these tools as introductory elements of their brand that allow prospective investors to better understand the variety of options they are facing,” Smith explains.
“The ubiquitous growth of digital advice platforms is exactly the catalyst needed to accelerate the development of traditional advice providers to serve their clients moving forward,” Smith continues. “Instead of perceiving the growing prominence of digital tools as a threat of disintermediation, traditional advice providers have an exceptional opportunity to encourage their advisors to fine-tune their practice model to capitalize on identified best practices and use technology to enhance their client relationships.”