Debate done, over, finis… For 401k advisors still concerned about the toll the robo advisor will take on their business, the Financial Planning Association (FPA) is here with an early Christmas gift; today’s investors want both robo and human-provided financial planning advice.
In other words, according to FPA, “automated investing is here to stay.”
“The debate about whether robos or human 401k advisors will win is moot,” said David Siegel, CEO of Investopedia, who co-sponsored the survey with FPA. “The future of financial advice is bionic—a powerful combination of both. As investors get more comfortable with automated investing platforms, they’re starting to demand both the low-cost benefits such platforms provide and the irreplaceably customized and high-touch approach of financial advisors.”
The study, High-Tech and High-Touch: Investors Make the Case for Converging Automated Investing Platforms and Financial Planning, reveals that investors are highly satisfied with using automated investing platforms—73 percent of respondents indicated they are satisfied or very satisfied with their primary automated investing platform.
Similarly, 75 percent of investors primarily working with a financial planner/advisor are also satisfied or very satisfied.
Investors currently using an automated investing platform shed some light on what has made these services so attractive:
- Eighty-one percent are confident that the automated platform they use supports their financial planning goals.
- Volatility is worrisome – 40 percent are uncomfortable using an automated platform during times of volatility.
- Seventy-five percent are satisfied with the current performance of their primary investing platform.
In particular, when it comes to particular areas of financial advice, respondents noted high degrees of satisfaction working with traditional financial planners and 401k advisors due to the high-touch quality of the advice:
- Seventy percent are satisfied with service related to estate planning.
- Sixty-seven percent are satisfied with tax planning advice.
- Sixty-six percent are satisfied with advice related to retirement.
When it came to the myriad of financial issues investors need to address, the preference of those surveyed was clearly for advice to be given by a financial planner/ 401k advisor, although many feel that quality advice can be accessed through an automated investing platform as well. In fact, 32 percent of respondents would use a financial planner/advisor for tax planning and 39 percent would use either for investment planning.
“There is an opportunity for financial planners/advisors, especially those who are CFP professionals, and automated investing platforms to collaborate for the benefit of the client,” says 2016 FPA President Pamela Sandy, CFP. “Technology is rapidly changing the way people invest and manage their finances, but clearly investors value the high-touch financial advice afforded by professionals. Those investors who utilize the benefits of technology and maintain a face-to- face relationship with a qualified financial planner, like a CFP professional, will be best positioned to meet their financial goals and achieve financial security.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
