Fear not the Robot.
Advisors remain the key to the future of Wealth Management.
by Harry McLaughlin, Tridus.ca
There are jobs that can be automated by machines, some that should be automated in fact. Frankly, machines can do a better job at certain tasks that are: tedious, require precise calculation, or are undesirable.
Thus brings us to the debate of where the Wealth Management industry will find itself in 10-15 years (at which point the majority of the wealth in North America will have passed to the next generation).
In some regards, yes absolutely, parts of the industry will be taken over by machines. Humans simply can’t compete with supercomputers calculating at the speed of light, quantifying a centuries worth of data, constantly back testing it against every known strategy and market condition that has ever happened, almost instantaneously. Much like how computers beat the all-time champions in chess or on Jeopardy, machines will move into this space and prove their competence over time.
But that is not Wealth Management, in fact, that is only a tiny part of it.
How about asset allocation? Again, we are seeing the rise of robots such as WealthSimple being able to compete in this space. Using proven strategies that have back-tested safe returns over time, and being able to then plop these strategies into the right accounts in a semi tax efficient manner, based on the variables that you enter into a computer… robots can do that... and as long as the client is entirely honest with the numbers that they type into the robo-advisors website, it’s hard to argue against using them in certain, simple, situations.
But again, that is not Wealth Management, it is just another small piece of the puzzle.
So you are probably asking, what is this mystical “Wealth Management” thing you speak of, that you believe can’t be replicated by the Borg?
Well... true Wealth Management is having the ability to sit down with someone and understand what their wealth actually means to them. A family’s wealth simply, isn’t simple. It’s not just numbers on a page that have no further significance other than being ‘just numbers on a page’. Wealth represents: blood, sweat, tears and sacrifices that that people have had to make in order to accumulate it. It’s the representation of their dreams for the future. They have saved it for their own future or the future of their kids, or grandkids, or for causes they want to support. People’s wealth is sounded by their hopes, their fears and their dreams. No robot, no website, no data center or algorithm will be able to understand this fully. As long as clients are humans, the best Advisors will be human as well.
This is simply because, unlike a robot, a human can relate, can see the subtle cues, can understand the emotion, and can explain complex concepts in relatable and understandable ways. The simple act of comforting and educating clients, no matter their question or concern, no matter how simple or complex, is the true definition of Wealth Management.
The other side of the debate is that not everyone needs: estate planning, financial planning, education planning and charitable giving trusts set in place, or even a face to face meeting every few months. Which is very true. But the beauty of not automating the Advisor is that then the Advisor and client can together make that call and determine the perfect level of service, not just have a ‘one algorithm fits all’ solution.
That being said, there is certainly a significant place for technology in the future of the industry and for the future of the advisor. Technology can be the greatest aid to advisors and should not be feared. It can automate, it can streamline, it can empower, it can enable, and most importantly, it can be used to double down on the human element of Wealth Management.
There will be changes in the industry. But fear not, if you are an advisor and can leverage tech towards your strengths, you will always be in high demand. From both the client, and from the firms that understand and embrace your true value.
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Harry Royden McLaughlin is the founder and CEO of Tridus Wealth Solutions.
Follow him at:
https://www.linkedin.com/in/harryroy
