The following is an excerpt from an article by Andrew Osterlund, special to CNBC.com
The growth of automated investment advice platforms — also known as robo-advisors — is a top theme of just about every conference in the advisory industry these days. What’s more, pundits are debating whether it’s the next big thing in investing.
Technology has enabled a totally different experience for the next generation of investors, who are justifiably more cynical about the value of financial advice.
-Ron Carson, founder and CEO of Carson Wealth Management Group
Ron Carson, a CFP and founder and CEO of Carson Wealth Management Group, thinks the robo-advisors present a fundamental challenge to the value proposition of financial advisors.
If an investor can get a globally diversified investment portfolio that automatically rebalances, and get access to a lot of cool digital tools for 25 basis points, why would they pay 1 percent or more for a human advisor?
“A good dose of paranoia is healthy,” said Carson, who also runs an advisor coaching firm Peak Advisor Alliance. “This market is changing.”
Carson added: “Technology has enabled a totally different experience for the next generation of investors, who are justifiably more cynical about the value of financial advice.”
Carson has been spending millions to upgrade his firm’s technology to give clients the ability to slice and dice data and test different investing scenarios. He’s also planning to overhaul the way his firm interacts with clients and charges them for services.
“We want to give clients the ability to pick and choose components of the services we offer,” he explained. That could mean using robo-like tools in some cases and giving access to a human advisor when the client wants. “We’re trying to figure it out.”
He calls it the “bionic advisor” proposition — a new buzzword in the industry describing advisors who make use of the best technology to serve their clients. It would give people the digital experience they want while also providing the ability to interact with a human being, which many investors also still want.
Not every advisor — most notably, solo practitioners — will be able to make the necessary investments in their business to compete in the future. However, Carson believes the evolution of financial technologies presents advisors with a huge, albeit risky, growth opportunity.
“There are going to be some winners and a lot of casualties,” he said. “The robo-advisors are the start of a creative destruction process highlighting what’s possible in the future.”
