When you’re booking a 10-day summer trip to France, you probably either use an online agent, such as Kayak or Booking.com, or go directly through the airlines’ and hotels’ websites. But, if your trip is more complex (and fancy), for example a three-week trip to multiple cities in Africa, you might use a human travel agent. For a longer, more complicated trip, it’s nice to work with someone who can advise on which vaccines are most important, or which visas are required.

You may not be using websites to book your more extensive trip, but it’s likely that the person assisting you is; at the very least, she’s using software to find you the least expensive routes and to determine what you’ll need before and when you get there.

A similar type of human-technology integration is evolving in the world of investing, but with trepidation. There’s a natural instinct to resist change, especially when it involves something as important as financial management. Some traditional advisors fear they might be replaced by automated investing services, or robo advisors as they’re commonly called, the same way switchboard operators were replaced by interactive voice response, or printing press workers by modern-day printers.

But this is different. The argument against robo advisors — that they could never replace humans — fails to acknowledge that, in the case of financial services, it’s never been about choosing one over the other.

Technology is not the enemy; technology adds value. What matters is how human financial advisors employ that technology to give their clients a smarter investing experience. 

ENHANCED RELATIONSHIP

For a lot of people, having a financial advisor is necessary. When people have significant net worth — $10 million or more, for example — their finances tend to become more complicated. In that scenario, an advisor can offer support in areas like strategic tax and intergenerational planning.

Even people who haven’t accumulated that level of wealth may need an advisor for things like estate planning and insurance selection — all things that technology alone doesn’t currently provide. Not to mention, a human relationship is important to some people. Robo advisors aren’t going to take that away anytime soon.

But humans have a key weakness that we can’t overlook: They only have so much time. And the more time they spend on tasks that can be automated — such as tax loss harvesting and rebalancing — the less time they spend advising their clients on things where they can offer substantial value, such as which life insurance to buy, or how to divide assets among children.

WHAT TECHNOLOGY OFFERS

A robo advisor offers advisors the ability to give more clients the attention they deserve by using algorithms, which are sets of logical rules followed in computer calculations. Based on each client’s financial goals, the technology automatically provides personalized advice on things like asset allocation for each goal, how much that client should save for retirement, and the types of accounts the client should maintain to reach those goals.

In a market downturn, financial advisors can be on the phone, empathizing with clients and encouraging them to stay calm. Meanwhile, the robo advisor is using algorithms to make smart decisions, free of emotion, to help keep clients’ goals on track.

These algorithms are always on, solving complex mathematical or logical problems, and looking closely for opportunities to save money. For example, algorithms can quickly identify a client’s tax consequences of an allocation change, deposit, or withdrawal. They can automatically reinvest dividends, tax loss harvest, and rebalance a portfolio. And they can do all of that efficiently at scale, and make the advice accessible to anyone, regardless of balance.

A human could possibly do all of these things but, instead of taking just seconds, it would take hours, or even days.

A robo advisor provides all of the technology advisors are already using — Excel, rebalancing tools, CRM programs, and dozens of other systems — but all in one place. This offers advisors an efficient way to reach more clients, and it gives them more time than they ever had before to focus on and build long-term, more meaningful relationships. It offers their clients a smarter way to invest.

Technology is never going to replace humans. But together, robo advisors and human financial advisors can deepen the advisor-client relationship and provide clients with the personalized, sophisticated, and tax-efficient advice they deserve.

Jon Stein is the CEO and founder of Betterment.

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