The Human Touch in Financial Advising

It’s an increasingly automated world, and while today’s automation may not eliminate the need for humans, artificial intelligence is changing the way people conduct their lives and business. Likewise, easily accessible apps and online services have convinced many individuals that they can take a do-it-yourself approach to many things — including investing.

Some advisors find it challenging to prove their value to clients when computers can dole out investment options at the click of a mouse or tap of a touchscreen. Robo-advisors can’t do everything, however, and advisors who can demonstrate particular qualities and add the human touch in financial advising are in better shape to set themselves up for success.

The Current State of Robo-Advisors

Robo-advisors (which, contrary to how it may sound, aren’t physical robots) use algorithms and calculations to provide investment advice; they’ve gained popularity since 2008 and are expected to soon manage $1 trillion of Americans’ wealth.1

These automated methods of investing are particularly popular with those who are new to investing or who don’t have a lot of wealth or complexity in their finances.1 Besides, the algorithms can work at lightning speed, which can appeal to today’s on-the-go way of life.

With such speed and convenience at their fingertips, what might persuade someone to talk to a living, breathing human about their investments instead of tapping on their phones a few times while watching TV? This presents an opportunity for advisors to use their uniquely human traits to help guide investors through financial waters that robo-advisors can’t navigate.

What Can a Human Financial Advisor Provide That a Robo-Advisor Can’t?

One of the biggest benefits of an advisor is the personalized attention — from a real person. A computer can’t replicate comprehensive financial planning advice that’s tailored to the individual, even if that individual enters loads of numbers into a brilliant algorithm. That’s because the numbers are only part of the story. A human advisor can read between the lines, encourage deeper conversations and help get to the heart of the matter.

For example, while an automated platform allows a user to plug numbers into a form indicating how much debt they’ve accumulated, that software application won’t be able to discuss events that led up to incurring those debts or the progress and behavior changes the person made repaying them. Nor can a software program offer seasoned financial advice about potential next moves.

A human advisor can sense tension, ask probing questions and read nonverbal cues and note when it might make sense to discuss financial planning strategies such as advice on how to increase savings, reduce spending, adjust to a shift in income, navigate a changing marital status and myriad other life circumstances. These scenarios don’t necessarily fit into a formula, and algorithms may prove unable to determine potential outcomes or implications.

As a financial advisor, you’ve likely helped numerous clients who’ve had experiences that fall outside the cookie-cutter formulas suggested by robo-advisors. Those unique experiences require a unique approach to investing that’s centered around individualized financial planning advice and one-on-one conversations that can uncover subtleties only a human can detect.

Influencing Investor Behaviors Through Emotional Connection

Artificial intelligence and machine learning are advancing in their abilities to mimic human behaviors. What they lack, however, is a strong ability to influence human behaviors. That requires an emotional connection and accountability.

Robo-advisors are not designed to manage the emotional component of investing. When the market takes a dip or a client is tempted to shift course against their better judgment, a traditional financial advisor is there for them to help calm fears and support rational decision-making.

A computer can’t do that, nor can it show empathy or have the hard conversations that might need to take place, such as addressing overspending, talking through the potential long-term consequences of early retirement, showing how unexpected healthcare costs may require a shift in direction and more.

The complexities of today’s financial industry require advisors to leverage various technologies to manage client portfolios and relationships — but it’s your human touch and expertise that ultimately make the differences that help clients invest wisely and reach their long-term investment goals. 

You can help potential and existing clients gain a deeper understanding of the value offered by a financial advisor by sharing our complimentary guidebook with them — Defusing Emotions: An Advisor’s Role in Disciplined Long-Term Investing. Simply click the link below.

Get the Guide: Defusing Emotions: An Advisor’s Role in Disciplined Long-Term  Investing


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