It goes to the heart of the fiduciary issue—is cheaper better? The question is now spilling over into tech, and how 401k advisors fit in.
Boston-based research and consulting firm Cerulli Associates projects that by the end of the year, the digital advice market will exceed $83 billion, with more than 75 percent of those assets within platforms at two firms.
“We believe that it is essential for traditional financial advice providers to view digital advice delivery not as a force that will displace them, but instead as a way to broaden their opportunity to deliver deeper levels of advice to a wider client base,” Scott Smith, director at Cerulli, said in a statement.
The question is not whether traditional 401k advisor firms will offer digital engagement platforms, he added, but which will best connect their advisors to clients in ways that highlight the value of advisory services beyond commodified aspects of portfolio management.
Over the past year, it has become apparent that “robo-advisors” are not the fundamental disruption that the traditional financial industry has been concerned about.
Instead, they are a catalyst moving traditional advice providers into the digital age, used as an additional tool for enhancing the client service experience, Cerulli argues.
As low-cost “robo-advice” continues to spread across the financial landscape, the firm notes that investors still perceive advisors who can understand life complexities as highly valuable.
“Households’ perceived need for investment advice has increased since last year,” Smith explained. “With ongoing geopolitical turmoil, households continue to seek advice from a professional who can help them manage the turbulent times by focusing on goals and staying the course versus making panicked decisions that will have a negative impact on a portfolio.”
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.
