Increasingly in 2021, goods and services across the world are becoming automated and moving online. Supermarket self-checkouts increasingly feature in UK stores, and driverless lorries will soon start to have an impact on freight, supply chains and jobs. In financial advice, artificial intelligence (AI), machine learning, and algorithm-driven platforms are gaining attention, with robo advisers (also called robo-advisors or roboadvisors) claiming to offer similar services to human financial advisers, but for a fraction of the cost.
Here at Vesta Wealth in Cumbria, Teesside and across the North of England, our financial planners are sometimes asked by clients why they should choose a human adviser to help them plan their wealth and finances, rather than a robo adviser. In this article, we outline some of our reasons for why (quality) human financial advisers have much more to offer than a pure, digital based approach.
The limited remit of robo advisers
What is a robo adviser? Typically, this is a digital based platform offering automated investment services to customers. The process involves signing up to the platform and answering some questions about your investment style, attitude to risk and financial goals. From here, the platform recommends a pre-made portfolio to you based on your answers. The fees are low, the customer service is often good and there are usually resources on the website (e.g. articles, videos and guides) to help educate you on different areas of investing.
This type of platform can be attractive for people with less capital to invest, who already have a lot of knowledge about investing and whose finances are not too complex. However, this does make robo advisers less useful for creating a holistic financial plan which accounts for other key areas in addition to investing e.g. retirement planning, tax planning, estate planning, trust fund administration and financial protection. These areas can be highly complicated in themselves, where laws can be obscure and subject to rapid change, let alone when trying to marry them together under a coherent set of goals. Here, a human financial adviser holds a significant and crucial edge, by helping you see the bigger picture, as well as joining the finer details together. It is very doubtful whether robo advisers could reach this level of sophistication in the foreseeable future.
The importance of a human touch
Of course, for all of us, our wealth and finances are deeply connected to our emotions, hopes and dreams. They touch upon questions such as: “How much do I need to retire, and will I be able to afford it?”, “Am I sufficiently financially secure in the event of disaster?” and “What is truly important to me in life, and how can I create a financial plan to reflect that?” These human questions still fall upon deaf ears with robo advisers, which are programmed simply to provide technical solutions to investment questions. They cannot exhibit empathy or provide a listening ear, or act as a sounding board to your ideas about the future. The human touch aspect of financial advice cannot be understated.
Here at Vesta Wealth, we know that our clients do not just stay with us because of what we achieve for them, but also because of how we make them feel. An experienced human financial adviser can, quite often, leave you feeling calmer, more positive about the future and more in control of your finances after a positive meeting. A human financial adviser offers guidance and support along life’s financial journey, where you may need help navigating your emotions about money as well as its technical aspects.
There in a crisis
Sometimes crises happen, and you are most likely to need expert help to get you through. Automated services like robo advisers are not equipped for this task. For instance, what can this kind of platform offer you if your circumstances change, such as receiving an inheritance or being appointed to act on behalf of a trust? What if your portfolio suddenly loses 25% or more of its value due to a stock market crash, and you are tempted to pull out your money in a panic? These scenarios are common throughout life and turning to a robo adviser for a solution is unlikely to provide the best answers. They also cannot take full stock of your assets, for instance, and suggest ways to arrange your estate in a tax-efficient manner. They cannot provide timely, helpful and cautionary advice which helps to stay your hand from an impulsive financial decision. This latter help, in particular, could represent many years’ worth of future retirement income.
Invitation
If you would like to discuss your financial plan and investment strategy, then we would love to hear from you. Get in touch with your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.
Reach us via:
t: 01228 210 137
This content is for information purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.