7 Astonishing Trends Driving Investors To Virtual (Human) Advisors


“One thing is clear: We don’t have the option of turning away from the future.  No one gets to vote on whether technology is going to change our lives.” -Bill Gates

In this day and age, I think people are coming to grips with the sentiment above that Bill Gates expressed so eloquently. Like it or not, technology isn’t slowing down.

Today, we have Baby Boomers posting selfies on Facebook, and the generation preceding them yelling unnecessarily loudly at Alexa to play their favorite songs.

But if ever there was a double-edged sword, the dizzying advancements in technology would constitute a prime example.  

The word “disrupt” has become quite the buzz word as of late. But technology is doing just that to many industries.

 So where does the world of financial advising stand? 

In this article, I’ll attempt to shed some light on what the future of financial advising looks like. It’s high time to consider the implications of the virtual advisor age.

Trend #1: RoboAdvisors and Rise Of The Machines

Software as a Service (SaaS) is creating options for almost any industry, presenting both consumer and professional with unprecedented freedom. From getting a date, to the transportation needed to get to said date, technology has streamlined processes in ways unthinkable only a generation ago. 

But could an industry so fundamentally built on face-to-face relationships and handshakes actually be threatened by artifical intelligence? 

Can the handling of a person or family’s entire future be secured and prosper by a series of algorithms?

Developers of “Robo-Advisors” argue that they can.

Beginning around the time of the Great Recession in 2008, software began offering digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. 

They eliminated the barrier to entry; minimum account amounts were no longer necessary. Regardless of your investable assets, you could find programs that would allow you to input your current financial situation and goals for the future. 

The next thing you know, you have data-driven suggestions and automated investment plans ready to go. 

In addition to the ease of access, robo-advisors proved to be a tempting low-cost alternative as well.

According to research firm Aite Group, total AUM handled by robo-advisors could top $1 trillion by 2023. 

What began as rather basic portfolio allocation has evolved into investment selection, tax-loss harvesting, and even treading into retirement planning. 

Factor in the annual flat rate fee of 0.02%-0.05% of your account balance that the average robo-advisor charges, and all of a sudden you have a pretty attractive alternative to the traditional advisor who will buy you a cup of coffee in a face-to-face meeting, but charge 2% and possibly some commissions. 

So does this mean that financial advisors need to hang it up and pursue a career in computer programming? 

Not by a long shot.  Like so many other aspects of life, there is rarely a one-size-fits-all solution.

It comes down to a basic theme that won’t be made obsolete anytime soon: humans still want to communicate with other humans when it comes to the most important decisions in their lives. 

Digitalization of financial advising in no way signifies full automation as the logical (or even best) next step.

Trend #2: Happy (Virtual) Mediums Abound

While technology undoubtedly has the ability to expedite and enhance  functions like rebalancing a portfolio, the human element remains as integral as ever.

For example, what happens in the event of crises, unexpected events, or extraordinary situations? Also, many people simply do not have the clear-cut goals and appropriate insights into their current financial circumstances that robo-advisors’ algorithms bank on. 

When a person is answering the robo-advisor’s survey, there is often a presupposed level of fiscal aptitude that often doesn’t exist.

Life has a way of requiring us to change plans, and a bot isn’t in the position to either show empathy or adequately advise next steps when such changes need to be addressed.

Then there’s the matter of individuals requiring advanced financial services. Intensive tax strategy, estate planning, and trust fund administration represent areas where A.I. will fall way short of maximum efficiency.

Now, the natural assumption is that the popularity of robo-advisors is the by-product of the wealth transition to younger generations. There are some numbers that would indicate otherwise. 

According to a survey conducted by Investopedia, only 20% of millennials are using robo-advisors. Respondents to the survey that represented Generation X show only 13% use them.  

These numbers suggest that even those seemingly born with a device in their hand still maintain a preference for actual humans when seeking to invest for their futures. Go figure.

Trend #3: The Glorious “Location Independent” Allure of Virtual Advising

Most people can see the benefits of what technology has to offer in assisting a new era of financial advising. But those who feel confident in eliminating the human element of handling their investment assets are reserved to either

A) people who feel confident in assuming an almost daily, hands-on approach to their finances

B) People who are just looking for a good entry level option to structuring their portfolio or retirement plan.

These two categories currently represent the minority. Everyone else still sees immense value of talking and planning with a human. And therein lies enormous potential for financial advisors who can transition into a more of a virtual role.

The independent Registered Investment Advisor has means at his or her disposal that their predecessors would have never dreamed of. 

Think of it: what financial advisor of previous years would have considered a marketplace outside of their immediate geographic location? 

Who would have thought that having a real brick-and-mortar office location has no bearings on running a successful advisory? 

The savings on rent and overhead alone constitutes a huge savings. In the words of Anand Sekhar, vice president for practice management and consulting at Fidelity Clearing & Custody Solutions, “The No. 1 expense at an advisory firm is compensation, and the No. 2 expense is rent.” 

As people around the globe become increasingly familiar with FaceTime and Skype for supplementing human interaction, it’s completely logical to see that comfort extending into even the most important professional services. 

A virtual office allows an advisor to run a business without sacrificing the personal touch. Today, this can be achieved while taking car of parental duties. 

The same applies to a financial planner who would have to move in order to pursue graduate education while maintaining a practice. And let’s not forget the ability, for the first time in history, for a financial advisor to become a “snowbird” if they so desire, escaping harsh winter months for more favorable climates without putting their business on hold.

Trend #5: New (And Cheap) Tools Of The Trade

Video conferencing provides a level of convenience for both the advisor as well as clients. 

Cloud-based solutions offer everything an advisor would need by way of

  • file storage
  • information and reporting tools
  • payroll/accounting services
  • phone service
  • email

Theoretically, one could satisfy all of these needs for free just using Google assets alone. 

However, paid services or premium accounts through companies like Dropbox, GoToMeeting, Ruby Receptionist,and a slew of others still end up being well within the means of any RIA. 

There are even services that will allow for a “virtual mailbox”… and I’m not referring to email. 

An advisor can have one of these services receive physical mail on their behalf, scan it, and upload it to a secure online portal.

But if you think that it’s only the small or independent advisories for which the virtual landscape has so much appeal, think again.

Trend #6: Investors Actually LOVE The Idea of Virtual Advisors

According to a report done by McKinsey & Company:

“A number of banks and wealth management firms around the world are already building execution expertise in delivering remote advice, attracting new clients, and reping significant cost advantgages.” 

It stands to reason. McKinsey goes on to demonstrate:

An estimated 42 million households (10 million located in North America), that represent $66 billion in annual revenue are considered prime candidates for virtual advice

  • Significant numbers of customers are comfortable with the concept of virtual advising - regardless of age or wealth level
    • 72% of survey respondents aged < 40
    • 67% aged 40-49
    • 59% aged 50-59
    • 51% aged 60-69
    • 48% aged 70-75
  • Institutions using virtual financial advisors have seen improvements in both economics and customer experience

Trend #7: Social Media Makes It Easier to Build a Client Pipeline

Now the obvious question becomes with such promising opportunity on the horizon of virtual advising, how do you best tap into it?

In the old days, advisors had to be much more geared towards the traditional methods of persuasive selling and closing. Networking events, seminars, cold email, and even (for those of us of a certain age) picking up the phone book and getting busy.

It doesn’t matter if you’re an independent advisor or an agent working for a firm, you still have to build your clientele, right? 


Enter social media. 

Digital marketing has proven to be a game-changer in how advisors not only find prospects, but find the ones best suited for their specific practice. For the advisor willing to step out of the traditional comfort zone of how they sell, social media offers methods to become a top producer without ever attending another networking seminar. 

By honing your messaging skills and developing some copywriting chops, you can become a welcome guest (as opposed to an annoying spammer) to an audience looking for the exact services you’re offering.

Having a Facebook Business Page opens up avenues for engagement that are beyond the scope of this article. Plus, running highly targeted paid ads, with the previously-mentioned correct messaging, can yield an excellent ROI. 

Regardless of the trials and tribulations that Facebook might be going through on a political level, the platform isn’t going anywhere in terms of being a vital marketing channel.

But the real gold for the virtual financial advisor lies in a different social media platform.

LinkedIn has remained the consummate social media resource for professionals. 

For the most part, people don’t “hang out” on LinkedIn. They are there for one reason only: to connect and network on a business level.  

I’ve helped many financial advisors who have transitioned into using LinkedIn as their sole method of booking quality appointments. It’s amazing how unobtrusive, welcoming, and effective the right marketing efforts can be when the ins and outs of the LinkedIn are put into play.

To further illustrate that LinkedIn has value way beyond a place to merely post your resume:

  • As of 2019, LinkedIn has grown to over 575 million users (LinkedIn)
  • LinkedIn has over 3X the visit-to-lead conversion rate of Facebook (Hubspot)
  • 41% of millionaires have a profile on LinkedIn and 44% of users earn more than $75,000 a year.(LinkedIn)
  • 29% of adult Internet users in North America are on LinkedIn and 40% of LinkedIn users check their profile daily.(LinkedIn)

Perhaps the most shocking number is that only about 4% of Financial and Insurance Advisors are using LinkedIn to connect with their ideal clients and have a system and strategy to generate leads on LinkedIn. (LinkedIn).

There may have never been a more lucrative and relatively untapped resource for building a financial advising business in the history of the industry. And you can do it from anywhere that offers internet

Virtual Concerns: It’s Not All Wine & Roses

Between powerful online avenues for digital marketing like LinkedIn, and the full spectrum of online resources that make physical ones obsolete, the sky’s the limit for what can be now be accomplished virtually.

While the subject of this article was to provide an overview of the promise that lies in transitioning into a virtual advisor, there are still uncertainties that one must contend with. I’d be doing a disservice not to mention a couple of the more prominent ones.

For one, there is the issue of compliance. Organizations such as the Financial Industry Regulation Authority (FINRA) are increasingly looking out to make sure that your messaging is fair and balanced. You should always aim to provide content that has mass appeal. If you have a compliance director, make sure to get insight on your static content (posts, profiles, website copy).

Also, as more of our sensitive information and processes are put online, the issue of cybersecurity becomes paramount. The protection of sensitive client data is of the highest priority. With no end in sight of the cat-and-mouse game between hackers and cybersecurity innovations, you would be remiss not to perform due diligence in ensuring that you take all reasonable precautions with the digital tools you employ.

The Future Is Now

Technology is not going to “automate” the financial advising industry. The human element still plays too big of a role. But operating an advising practice virtually cannot be relegated to just being a fad; the digital age of advising is only just beginning.

In a world of advancements that resemble something out of yesterday’s science fiction novels, it shouldn’t come as any surprise that conducting a thriving virtual advisory isn’t just possible, it’s the next logical step.

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