Appeal Of Robo-advisors Extends Beyond Millennials
The investment market is highly complex and the best investment opportunities are often hidden like buried treasure.
In addition to experience and knowledge, investors also need intelligent technology to help them to find and manage the best opportunities on the market. Companies like Wealthsimple have started to offer hybrid robo-advisor models aimed at High Net Worth Individuals (HNWI) and even classic financial institutions are investing heavily in robo-advisor solutions aimed both at millennials and HNWIs.
For example, in March Wells Fargo announced Intuitive Advisor, a robo-advisor service which will be launched in June 2017. The banks and the world of consultancy and investment management are undoubtedly set to lose their oligopoly because of a tsunami which will radically change the current landscape. The causes of this future change are plain to see: MiFID II, the digital revolution, the explosion of the Fintech phenomenon and the PSD2, with the challenge of open banking, will lead to a major change in the investment services sector. In this new context, some players will disappear while others will become stronger... while the investment world will become more efficient and transparent for customers.
In Italy, robo-advisors are struggling to gain traction for a number of reasons: the widespread belief that financial consultancy is free, low levels of financial and digital literacy, the high average age of current investors, the laziness which at times turns into fear when customers change financial institution and people’s blind faith in friends and acquaintances who work in the sector and "will never betray us". Meanwhile the receptiveness of millennials to new technologies and their unwillingness to visit bank branches in person are beginning to reverse this trend. There will not be a complete separation between roboadvisors and financial advisors; they are two perfectly compatible concepts which may be able to collaborate effectively. This is already the case in the United States where robo-advisors which were created 100% online are reaching agreements with networks of financial advisors. From a theoretical perspective, investment services are one of the 'easiest' financial services to sell online. However certain mental barriers remain in the minds of many investors and it is often necessary to have a human figure to provide a summary of the direction being taken and to outline the underlying strategy.
The great challenge will be for traditional financial advisors and robo-advisors to work side-by-side: traditional advisors must become increasingly digital, while the robos must become even more virtual and perhaps even adopt some more human attributes. A new and exciting reality is changing the world of investments and the great beneficiary will undoubtedly be the end consumer, as with technological assistance to analyse data they will be in a position to make wiser financial decisions, and the benefits enjoyed by individuals will over time benefit society as a whole.