Cooler heads have prevailed. Far from a Terminator-like, post-apocalyptic wasteland many predicted for the 401(k) advice industry as a result of the rise of the robo advisor, new research confirms that humans aren’t yet obsolete.
Global analytics firm Cerulli Associates finds that “the concept that digital advice is devoid of human mediation is a myth,” something technology advocates have long argued.
“There is a misconception that digital advice means no human interaction between the customer and the firm delivering advice,” Tom O’Shea, associate director at Cerulli, sain in a statement. “In truth, Cerulli has found that even the most automated advice platforms allow a consumer to reach a representative through a toll-free number or online-chat.”
“Virtually all digital advisors allow a consumer to connect with a human representative,” O’Shea added. “The term robo-advisors is deceptive because most robo-advisors offer clients access to a representative via the telephone, web chat, or video chat. Cerulli believes that digital advisors must incorporate some element of human interaction in their platform to increase client satisfaction.”
Current industry economies dictate that robo advice will mainly be employed for younger, tech savvy investors with relatively low assets. However, once those assets accumulate to an advisor’s minimum investable asset requirement, the investor will be moved to a more one-on-one model with a financial advisor or investment manager.
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.
