Advisors Who Understand PR Shouldn’t Fear ‘Robo-Advisors’

To someone unfamiliar with the financial services industry, the term “robo-advisor” might conjure images of a sci-fi villain. However, as financial advisors know all too well, robo-advisors are a real phenomenon and can potentially threaten their business. The key word here is “potentially,” because advisors that understand their value-adds—and can effectively communicate them to the marketplace—have nothing to fear.

Robo-advisors are online advisory services that use algorithms to determine the best investment options for individual investors. Much has been written of late about the rising popularity of these platforms, and concerns that they may eventually make financial advisors obsolete.

True, robo-advisors are attractive to investors who do not have the asset minimums to work with an advisor, or do not wish to pay the fees associated with retaining an advisor. In addition, younger investors who are part of Generation Y (also known as millennials) have less trust in professional financial advice than their parents.

But while robo-advisors may seem like cost-effective financial planning and investment options, they lack something crucial—the human touch. A financial advisory website can use a computer-generated algorithm to create a portfolio, but it can’t forge the deep personal relationship required to fully understand an investor’s financial goals and the best way to achieve them. Nor can online platforms apply decades of expertise and experience to helping investors effectively save for retirement and both generate and protect capital in all periods of a market cycle.

Human advisors cost more than their automated competitors, but the higher fees are worth paying in the long run. As the Ottawa Citizen asked in a recent article about online advisory platforms, “Robo-advisors could manage your money for less, but would you trust them?”

It’s not enough for advisors to harness the latest technology solutions to increase client engagement—they also need to tell the investment community about the importance of the engagement aspect of their business. This is where public relations enters the picture.

In everything from website copy to press releases, advisors should emphasize how the long-term client bonds they develop, coupled with their years of expertise and experience, can help their clients achieve their financial goals. On top of that, proactive PR campaigns stressing why and how advisors are a critical part of the investment and financial planning processes can make their audiences realize that cutting advisors out of the equation is harmful rather than helpful.

Robots and websites can certainly perform many functions, but they are no substitute for human relationships, knowledge and reasoning. If advisors proactively convert their concerns into action by using PR strategies and tools to disseminate this message, they have no reason to fear robo-advisors. As President Franklin D. Roosevelt famously said, “The only thing we have to fear is fear itself.”