Financial Advisor versus Robo Advisors: What Are Your Clients Looking For?


Last Updated on May 21, 2021 by Carlo Navarro

The automation versus human dilemma is not unique to wealth management. It’s been a popular theme for sci-fi authors since the middle of the last century. Asimov published “I, Robot” in 1950 as a cautionary tale about the dangers of intelligent machines.

For a more contemporary example, imagine robo-advisors as the minions of the evil galactic empire. They recently quelled an uprising from dangerous short squeezers on reddit and are now facing off against the heroic advisor army of fiduciaries. Arm yourself and pick a side.Before you fly your X-Wing into battle, let’s spend a little more time here on Earth. That short squeeze I just mentioned put some crazy ideas into your clients’ heads. Some of them now believe that they can trade without you or a robo-advisor. Let’s examine that first.   

Threat Assessment: Robo-advisors versus Robinhood

Clients don’t call them robo-advisors. The term was coined by financial advisors and adopted by marketing agencies and media outlets. It was supposed to make automated investment apps sound ominous, like an evil force rising from the deep to take control of global finances.

Think about this from your client’s perspective. On one side, you have an automated application that will manage investments for you. On the other, you have a trading platform that gives you complete control over investment decisions. Which would you choose?

To complicate the decision, you see a news story about a group of independent traders squeezing GameStop stock, making millions of dollars overnight. Robos didn’t cash in on that deal. Neither did human advisors. That was all done by self-directed investors.

Who’s the greater threat to your firm? Robos or Robinhood? Treat them as equal adversaries. The only way to capture the hearts and minds of prospects and clients is to prove you’re the best choice. What do you offer that a robo-advisor or trading app cannot?

Winning the Robo Battle by Communicating Value

A robo can’t have a conversation with your client. They can’t reallocate a portfolio based on a client’s wishes. Buying and selling decisions are based on algorithmic equations. These are just a few of the many drawbacks to using a robo-advisor. Clients need to know all of this.

That said, your client conversation shouldn’t be strictly about what the robo-advisor doesn’t offer. Applications like Betterment and Wealthfront work to improve their software every day. If you’re going to point out robo flaws, make sure you show clients a better alternative.

Explain how you work and why they should use a human financial advisor. You’re available for a phone, video, or face-to-face conversation. Reallocation is a discussion, not a unilateral action. Trading is done by a human being, with a system of checks and balances in place.Properly communicate your value and clients will understand why a human financial advisor is a better choice than a robo-advisor, or a self-directed trading platform. Yes, you charge fees for your services, but those fees are justified by what you bring to the table.

Using Technology to Offer Robo-Like Services

Ask yourself why your clients would want to use a robo-advisor. Obviously, there’s the convenience factor. Robo developers emphasize the simplicity with which you can invest money and the ease of use of their applications. That’s the biggest draw for their customers.

You could offer that, too. Financial advisors can take the best of technology and integrate that into their practices while maintaining the personal touch that clients want. On-demand reporting and automated communication are two offerings you can focus on.

Another appealing aspect of robo-advisors is the absence of a minimum investment amount. As a financial advisor with overhead and expenses, you can’t really do that, but you can lower your minimums if you have more cost-effective software that automates certain processes for you.

At Blueleaf, we offer an interactive client portal with a best-in-class mobile app that has on-demand, twenty-four-hour performance reporting built right in. With our system, you can automate your email communication and rebalance client portfolios in just a few clicks.

Robo-advisors Can’t Offer Holistic Financial Services

Financial planning and asset management can be automated. Human interaction cannot be. Great wealth managers offer solutions to help clients live a happier and more fulfilling life. That requires empathy and understanding, two traits that machines do not have.

Taking a holistic approach to financial services gives your firm a clear advantage over any robo or trading platform. Make yourself the center of your clients’ universe for all things financial, including retirement savings, insurance, investments, real estate, and accounting.

That’s how you beat the evil galactic empire. You don’t need to be Luke Skywalker with a lightsaber and mastery of the Force. Successful financial advisors use new technology to battle the robo-advisors, but they rely on their human side to retain clients.


  • Kevin D. Flynn

    Kevin D. Flynn is a former Head Coach at Blueleaf and founder of Flynn Consulting, LLC, a business and financial coaching service for startups and small business owners.

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Kevin D. Flynn is a former Head Coach at Blueleaf and founder of Flynn Consulting, LLC, a business and financial coaching service for startups and small business owners.
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