survey of financial professionals reveals nearly half view robo-advisors as having no real impact on the industry.
Unlike robot portrayals in science fiction, a robo-advisor is a service that provides automated investment advice. Clients provide their investment goals and risk tolerance and the robo-advisor uses algorithms to provide portfolio management advice, all without a human financial planner.
LIMRA surveyed more than 300 financial professionals from career and independent insurance agents/advisors to independent investment advisors. Nearly 7 in 10 career and independent insurance agents are not familiar with the capabilities of a robo-advisor. By contrast, 71 percent of independent investment advisors are familiar with them. This dichotomy is not surprising as robo-advisors are currently used only for investment management.
While investment advisors may be more familiar with robo-advisors, 8 in 10 are not leveraging them currently and have no plans to in the immediate future. Among insurance sales professionals, 9 in 10 are also not leveraging and have no immediate plans.
Even though robo-advisors are still fairly new to the industry, their potential could represent opportunity for forward-thinking financial professionals and a threat to complacent ones.
The current users of robo-advisors tend to be young and more sophisticated about investments. To financial professionals, they also represent tomorrow’s clients. Financial professionals who include technology driven alternatives into their practice have a better chance of retaining these new investors.
Earlier LIMRA research noted how consumers want a seamless, omnichannel experience when they interact with financial services companies. Financial professionals who leverage robo-advisors as part of their practice can more effectively meet consumer demands and give themselves a competitive advantage.
Nearly every day, articles about “robo-advisors” and their potential impact appear in various financial news media. Results from a new