The purpose of Money Talk is to improve readers' financial capability with research-based personal finance information.
Thursday, May 9, 2019
Robo-Advisory Industry Trends
a recent Jump$tart Coalition Partner’s Meeting, Chris, Lee, the Connecticut
State Coalition leader and a financial advisor, spoke about trends in the
robo-advisory industry. “Robo-advisor” is the term used to describe digital
platforms that provide automated financial planning and investment advice. The
advice is generally driven by algorithms with little or no human interaction.
Clients complete an online survey on which advice is based.
predictions for robo-advising are as follows:
firms (think Google and Amazon) will enter the robo-advising field as they have
already done in many others (e.g., Amazon’s purchase of Whole Foods
supermarkets in 2017).
intelligence will be increasingly integrated into robo-advising platforms so
that they will become more “human-like” and appealing to consumers.
will be increased government regulation and “fee compression” and profit
margins for advisors will be squeezed. Lower fees will increase access to
financial advice for lower net worth and younger investors.
will be new technological advances (e.g., a “real time” analysis of the cost of
buying something with minimum payments) and more mobile-friendly platforms.
blending of human financial advisors and technology components in a “high-tech
and high-touch” combination of services. Human advisors can help people keep
their emotions in check and stay on track.