At its core, investing is seen by many as a data-driven activity. So, it’s not surprising that so-called “robo-advisors” might be perceived as the next big thing in portfolio management, especially when the services are offered at a fraction of the price of a human advisor. But there’s a problem with that theory: Many investors highly value the care and concern that come from human financial advisors and simply aren’t willing to hand over their nest eggs to a “robot.”
The value of the human touch was reinforced by a 2016 Gallup survey.1 Participants were asked whether certain positive qualities were more applicable to robo-advisors or human advisors. Robo-advisors outranked human advisors in just one of those 10 qualities: charges lower fees (63% attributed this more to robo-advisors and 26% to human advisors). In second place was “simplifies the investing process for investors;” only about one in three investors associated that quality more with robo-advisors.
How is technology best used by advisors?
When evaluating these results, it’s important to clarify what’s meant by “robo-advisor,” as this term can be used to describe a range of technology solutions. In the Gallup poll, robo-advisors were defined as “digital advisory services that use computer algorithms to select stocks and other investments for people based on the information people provide about their risk tolerance and goals.” In other words, there’s little-to-no human connection within this definition.
With that in mind, these survey results echo what our philosophy at Jemstep has been for years: While digital solutions can play a valuable role in automating various elements of the investment process, the human touch remains central to the investment advisory experience.
At Jemstep, we believe that technology is best used to enhance the investor-advisor relationship, not replace it. In fact, we consider Jemstep Advisor Pro to be an advisor-powered technology, not a traditional “robo” platform.
Our technology is designed to help advisors more efficiently engage, advise and serve their clients. Investors have 24/7 access to digital portfolio analysis and paperless services but can also reach out to an advisor as needed. Advisors meanwhile have more time to focus on building relationships, better understanding their clients’ needs and helping them navigate through major life events or times of economic uncertainty, such as the 2008 global financial crisis.
So while the poll points to the fundamental need of a human relationship in investment management, we believe that our technology platform actually augments the ability of advisors to provide the human touch to more clients when they may need it most.
Read more blogs on the role of technology in financial services.
1 Source: Gallup: “Robo-Advice Still a Novelty for U.S. Investors.” July 27, 2016. Findings came from the Wells Fargo/Gallup Investor and Retirement Optimism Index survey.
Important information
Blog header image: Jinning Li/Shutterstock.com
Jemstep, Inc. provides a digital solution for investment advisors. Jemstep is a wholly owned, indirect subsidiary of Invesco Ltd.
Kevin Cimring
Chief Executive Officer, JemstepKevin Cimring is Chief Executive Officer of Jemstep, responsible for the direction, management and overall performance of the business. He also oversees the financial planning, business planning and staff management of the organization.
Mr Cimring is a co-founder of Jemstep and has over 15 years’ experience in financial services. Prior to founding Jemstep, he was chief executive officer at Bridgeway (Pty.) Ltd. and head of corporate finance, and an executive board member at Peregrine Holdings, a publicly traded institutional and retail investment management company. He also practiced as a corporate lawyer for several years, representing large public companies including banks, brokerage firms, wealth management companies and other businesses spanning the financial services sector.
Mr Cimring earned a BA LLB degree, with majors in law and English, from University of the Witwatersrand.
