From robo to robust: the value of personal financial advice

Like many industries, financial services has undergone significant shifts in recent years. One of the most notable is the rise of robo-advisors, which offer increasingly sophisticated investment management through the use of artificial intelligence (AI). While robo-advisors offer some advantages, they lack the depth and breadth of service that a professional advisor can provide.

Understanding the appeal of robo-advisors 

It’s easy to understand why some people might be drawn to automated advising platforms. The “always on” nature of robo-advisors lets investors take advantage of 24/7 portfolio management. Some automated investing platforms offer reduced fees, creating the perception of being lower cost. What investors may not understand, however, is these “savings” may overlook potential growth opportunities that a financial advisor might see.

In addition, AI-based platforms offer algorithm-based investment decisions – removing emotion and bias from financial advice (at least in theory). But advising has grown beyond simply providing investment advice. Today’s clients don’t just want portfolio management; they want genuine relationships with an advisor who knows and understands their situation and goals. When clients seek financial guidance, they want to feel heard, seen and understood – something a digital interface cannot provide.

Planning through emotional intelligence, not artificial intelligence 

Life events – such as marriage, divorce, inheritance, business succession, career transitions or the loss of a family member – profoundly influence our financial planning decisions. Sometimes, we can anticipate these changes, but more often we cannot. Planning for both expected and unexpected life events requires nuanced understanding and outside-the-box thinking that goes well beyond pre-programmed models. Professional advisors can develop strategies that encompass family dynamics, personal values and long-term aspirations. Plus, advisors can remember the last details of a conversation, recognize when a client’s priorities have shifted and offer genuine empathy in hard times – something AI-based tools can’t do.

Robo-advisors also can’t read body language or hear tone. They lack the ability to identify a client’s “blind side,” a particular bias or area where reason and logic may not be enough to spur action. Experienced financial advisors excel at identifying both spoken and unspoken concerns, especially during times of personal change or market volatility. They’re much better at understanding the psychological aspects of wealth management, especially those aspects that drive us to make decisions. As a result, advisors can offer reassurance and prevent clients from making emotion-based financial decisions much better than robo-advisors ever could.

Advisors build trust with clients

Advisors’ ability to read verbal and non-verbal cues comes as the result of relationships developed on a foundation of trust built through open and honest conversations about sensitive matters. This level of trust spurs clients to open up about their hopes, fears and dreams, which is essential for developing personalized strategies. Advisors can build this trust by demonstrating authentic and sincere interest in all aspects of the client’s life, taking time to understand their values, goals and concerns so that they can truly know their clients and their families.

While AI-based advising tools create financial plans based on numbers, professional financial advisors develop strategies based on people. They also excel at helping clients craft comprehensive financial plans that address all aspects of their clients’ lives. These plans go well beyond investment returns to consider family relationships, personal values and individual wishes. By asking deeper questions and paying attention to subtle cues, advisors can uncover important factors and ask deeper questions that can’t be covered in a digital questionnaire.

The future of financial advice

The future of financial advice blends the best of AI and automation with the personal touch professional advisors provide. Technology can enhance certain aspects of financial planning and create better efficiencies, serving as a tool to complement – not replace – the advisor-client relationship. And for many investors, robo-advisors may be a starting point that helps them build basic investing habits before they’re ready for more comprehensive financial planning.

So, how can financial advisors establish and maintain a competitive edge over automated platforms? Here are a few best practices:

1. Demonstrate relationship-centered value. Show clients how your understanding of their life circumstances, family dynamics and personal goals helps you pinpoint financial strategies that algorithms simply cannot match.
2. Become a life transition expert. Position yourself as a guide through life’s unpredictable events – from career changes to the loss of a loved one – providing your client with support that goes beyond portfolio adjustments.
3. Create a comprehensive financial planning experience. Offer financial planning that integrates strategies that address all aspects of your clients’ lives, including tax management, estate planning, risk management and charitable giving.
4. Leverage technology selectively. Use digital tools to enhance your efficiency while emphasizing to your clients the human judgment and personalization you add to the technology-supported process.
5. Communicate regularly. Establish consistent, meaningful touchpoints with clients to demonstrate your ongoing attention to their changing needs and circumstances.

The most successful financial advisors understand that their true value lies not in simply managing portfolios, but in serving as trusted guides who help clients and their families navigate life’s financial complexities with confidence and clarity. This combination of professional expertise and personal connection creates relationships that no algorithm can replicate.