CNBC reports on robo-advisors. It notes that the dozens of Web-based advisory firms that have launched in the last decade don’t seem like much of a threat to financial advisors. As a group, they have collected a small fraction of the assets managed by traditional advisors, and their client base of do-it-yourself investors and younger individuals with small amounts of assets are typically not the traditional advisor’s target market, anyway.
On the other hand, however, the so-called robo-advisors are a force to be reckoned with. Their low-cost service delivery models and the increasingly sophisticated tools they offer to investors represent the future of the industry. Leaders of top wealth management firms may not see them as immediate threats, but they ultimately could have a major impact on the market for financial advice.
“When you think of financial planning, 70 percent of it can be put on a piece of paper for the typical young family,” said certified financial planner Russell Hill, chairman and CEO of registered investment advisor Halbert Hargrove, the second-highest-rated fee-only wealth manager in CNBC’s recent Top 100 Fee-Only Wealth Management Firms list. “The robo-advisors are going to put pressure on everybody in the industry and force advisors to demonstrate their value to clients.”