The Virtual Human Advisor



The internet and algorithmic tools have combined to create a world where investors can receive a notable collection of advisor services from a so-called robo-advisor. A few numbers get put into an electronic form and the algorithm spits out a wide range of “advice” regarding investment options that meet the client’s criteria for risk tolerance, rate of return and income generation.

It’s all relatively simple, and it is very cold-blooded.

To battle the onslaught of robo-advisor services, human advisors promote the advantages of human interaction and conversation that can explore concepts the algorithms may not be able to access. The human touch and the capacity to think outside the algorithmic box remains one of the strongest selling points of human financial advisors.

So therein lies the conflict that exists in the advisory industry today. Most large firms offer robo-advisor services as well as human advisors to work with, and many robo-services include an option to access a human voice and mind when the situation warrants such attention.

How close are we getting to the day where human interaction ceases to be a selling point for advisors? And does video-chatting provide the same benefits as when a client is in the same room with his or her advisor?

Such questions are the kickoff point for Spectrem’s study Using Technology and Social Media in Financial Decisions. The study looks at how modern investors combine their use of social media sites and technological advances via the internet to be active investors and maintain contact with advisors, even for those investors who never actually meet their human advisor.

And how many such investors are there?

According to Using Technology and Social Media in Financial Decisions, 15 percent of all investors who have a financial advisor have never met the person in person. More than half of those investors do not live in the same area as their advisor, so that a face-to-face meeting is not a possibility.

The details of a long-distance advisory relationship raise several questions, chief among them being “Does the investor suffer in any way from having an advisor they have never met?” Based on the segmentation of investors available in the Spectrem study, the likely answer to that question is “No.”

A segmented look at investors who have never met their advisor shows that actual physical proximity is overrated. Among those investors who consider themselves to be very knowledgeable about investing and finance, 19 percent have an advisor they have never met. Among those investors with a net worth between $15 million and $25 million (the wealthiest segment in the study), 26 percent have a human advisor they have never met.

That’s the wealthiest and most knowledgeable investors who work with an advisor they have never met.

Technology obviously makes such relationships possible. But a majority of those investors who have advisors they have never met are apparently “meeting’’ via telephone conversations, or by email inquiries and responses. According to the Spectrem study, only 9 percent of investors use video-chat services to communicate with their advisor (21 percent communicate via texting, but it is uncertain how detailed and in-depth those communications are).



©2020 Spectrem Group



Keywords: investors, advisors, Spectrem, robo, video, e-mail, texting