Earn Rewards: Sign up now and earn a special reward after your first deposit. See offer details

Now available: New and improved Socially Responsible Investing portfolios. Learn more



Save, invest, retire

GET — On the App Store


Introducing Custom Model Portfolios. Learn more


Will Robo Advisors Really Replace Human Financial Advisors?

Financial advisors today are both enthusiastic about and fearful of robo investing. On one hand, they see these technologies as opportunities to streamline…

Articles by Jon
By Jon Stein Founder, Betterment Published Oct. 02, 2018
Published Oct. 02, 2018
3 min read

Financial advisors today are both enthusiastic about and fearful of robo investing. On one hand, they see these technologies as opportunities to streamline processes and eliminate their involvement in tasks that distract them from what they’re most passionate about: building client relationships. On the other, though, they ask, “If software can take on much of the work associated with investing, what’s my role?”

Rather than avoid technology for fear it will diminish their role in clients’ financial decisions, advisors need to consider this: Could a robo investment management tool actually improve their relationships with clients?

The Importance of Humans in a Digital World

Financial advisors who think their jobs may soon be usurped by robo technology should consider other industries that rely heavily on technology, like healthcare, where human knowledge and experience are still vital. The quality of care in the U.S. is improving every day, with higher-quality, more predictable care and better outcomes; much of this can be attributed to technologies that aid tracking, data science, delivery, best practices and more. In the midst of all this, the roles of physicians and other providers have not diminished, but their roles have changed.

Professionals who provide insights that improve decision making will always be needed, no matter how integrated technology is in service delivery. The human factor in wealth management – encouragement during market volatility, guidance with respect to decisions, educated insights – will always be important to clients, especially as financial issues become more complex. What advisors do that technology can’t – digging deep to understand clients’ needs, motivations and goals and using that information to offer practical and appropriate advice – is advisors’ ‘job security,’ so to speak.

Discover What Betterment for Advisors Can Do for Your Firm

The Benefits of Investment Management Technologies

Perhaps the most important benefit of investment management technologies is that they relieve advisors of many of the low-value, routine work related to investment management – such as trade order management and execution, analytics, modeling, commission management, and others. Without this burden, advisors have more time to spend strengthening their relationships with clients and prospecting for new ones, helping build revenue.

Another benefit of technology is that it aligns the service advisors deliver with the demands of today’s investors (particularly millennials), who, according to Ernst & Young in “Managing Change and Risk in the Age of Digital Transformation,” want an intuitive, simple, relevant, secure and instantaneous experience – one that offers choice and value. Firms that continue to rely on legacy technologies will struggle to satisfy clients; in fact, it’s been shown that clients will switch to a new financial partner if their technology is better.

More on The Horizon

Betterment is continuing to empower advisors to engage productively with clients, giving them expanded capabilities around goal-based planning and aggregating external accounts. Recognizing that cash flow issues – credit, mortgages, etc. – are at the heart of every client’s’ financial life, it makes sense for advisors to help manage and optimize clients’ cash flows in addition to managing their investments. The vision for Betterment for Advisors is to allow financial advisors to have a holistic view of clients’ finances and make even more informed recommendations for what clients can be doing to achieve their goals. This “big picture” capability means advisors can add even more demonstrable value, far and above portfolio and investment deployment.

Rather than approaching robo technology with reservations, advisors should embrace the opportunities it presents – to spend more time with clients, to drive back office efficiencies, to boost revenue and to deliver a better client experience. Clients will always need and want go-to experts to consult about their finances, and the conversations, advice, and guidance they rely on will become increasingly important as the financial world continues to become more complex.

Discover What Betterment for Advisors Can Do for Your Firm

This article is part of
Original content by Betterment

How would you like to get started?

Manage spending with Checking

Checking with a Visa® debit card for your daily spending.

Save cash and earn interest

Grow your cash savings for general use for upcoming expenses.

Invest for a long-term goal

Build wealth or plan for your next big purchase.

Invest for retirement

Set up traditional, Roth, or SEP IRAs to save for the golden years.

See details and disclosure for Betterment's articles and FAQs.