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Learn MoreI love the TV show Survivorman. You might not be familiar with the show, but I’m sure you’re familiar with the premise: A survival expert, in this case a rugged Canadian named Les Stroud, is dropped into the wilderness with nothing but the clothes on his back and some basic tools. He’s then faced with scenarios that would cause most of us to panic: Lack of available food, no clean drinking water, and no shelter to sleep in.
Despite the hours I’ve spent watching the show, I’m pretty confident that I wouldn’t stand a chance of navigating the wilderness on my own. I might be able to identify an edible plant or two, but there’s no way that I could adapt to extreme situations as easily as Les Stroud. Why? Because his knowledge of the outdoors and of survival skills have prepared him for almost every situation. He’s an expert, and unless I go through the same rigorous training he has, I’ll never be one—no matter how often I watch his show.
But it seems that people don’t have this same mindset when it comes to money management. More and more, people are bypassing any sort of relationship with a financial advisor and doing their financial planning themselves. To me, this is a lot like heading into the Amazon rainforest alone after watching a few episodes of Survivorman. But let’s take a look at why people are doing this.
As technology has become more and more pervasive in our society, people have started to see the benefits it brings to our everyday lives. A recent study by Wells Fargo and Gallup showed that 65% of clients preferred at least some kind of technology to play a key role in their financial planning—26% even said they’d prefer technology to play a dominant role over professional insight.
What do Betterment, MarketRiders, and Personal Capital have in common (apart from being three of the most popular “robo advisors” on the market)? They all have an attractive, easy to use interface. Potential clients are using these services to create custom plans and devise strategies on their own, while seeing the short-term benefits and drawbacks of their decisions in real time. It’s tough to compete with that if you’re an advisor who is still using printed spreadsheets.
Who doesn’t like the feeling of being in control of their own destiny? Some people mistakenly think that advisors only have their own interests in mind, and that their clients’ wellbeing is secondary to their bottom line. By extension, they think that robo advisors are the solution to their needs because they cut out what they perceive as the middle man: you, the advisor.
These motivations don’t mean that advisors are going to go the way of the dinosaur—far from it, actually. What it does mean is that advisors are going to need to take a different approach to attracting and retaining clients. By adopting new technology into your business and by giving your clients a more active role in the wealth management process, you’ll continue to grow your business while appealing to your clients’ “Do-It-Yourself” tendencies.
