Are Human Advisors Losing Work to Digitized Banking Services, Robo Advisors
There are significant changes taking place in the larger financial marketplace, which includes a reliance on technology and the emergence of a massive new generation – millennials. This younger generation is showing a clear preference for ‘do-it-yourself’ (DIY) apps and, combined with a transfer of wealth from the Baby Boomer generation to the Millennials, the wealth management industry is under increasing pressure to focus on digital services. This includes a noticeable shift from human advisors to robo advisors.
The advancement of modern technology and societal shifts could be behind the push to automate wealth management, replacing human advisors with robo-advisors. According to a report by Financial Technology Partners discussed in “Robo Advisor Trend Greatest Threat To Wealth Management Since 1990s,” posted by Mark Melin on ValueWalk.com, a growing preference for robo advisors is becoming a major disruptive force in the wealth management industry. Startup financial firms have found success with this new technology and traditional firms, including JPMorgan and Bank of America Merrill Lynch, are also investing in the technology, offering robo-advising services to certain clients.
Tech-savvy millennials are showing a preference for DIY apps, particularly the fintech innovations that make it easier to manage finances and investments. Many financial services firms are taking the time to reevaluate products and services, as well as digitizing those services, in order to provide the ‘Amazon and Uber-like’ experience young consumers have come to expect. As more wealth advisors and financial management firms invest in these apps, the report predicts, the industry may soon see an increase in strategic partnerships, mergers and acquisitions.
Improve Customer Services With ERP
There are also a few red flags to the robo advisor trend. There is a question of how fiduciary laws can be applied to the robo advisor and how it might perform in a market downfall. In addition, internet security and cyber-criminal activity can also lead to problems, such as undesired automatic trading, if left unchecked. In order to improve customer services, wealth management firms can invest in other technology, namely a strong enterprise resource planning (ERP) solution. Modern ERP offers workflows and other time-saving automations that can streamline services. Strong portfolio management, risk analysis, and cash management features can support better decision-making and improve customer services.
Although robo advisors seem to be taking over, that doesn’t mean there isn’t a place for human wealth advisors. Contact AKA Enterprise Solutions to learn how ERP can be a wise investment in a rapidly changing financial marketplace.