Robo-advisers, online wealth management services which provide automated, algorithm-based advice, are hitting the headlines.
They are generating billions of dollars of assets, but some commentators believe that customers will want human interaction once the markets become tougher. In a recent piece for Bloomberg, Jason Schenker, Founder of Prestige Economics, expressed concerns that untested robo-advisers are becoming an increasing market risk.
However another school of thought suggests that technology can do a better job than a human counterpart. With so much data available digitally, it’s more effective to use a robo-adviser.
During last year’s ‘rise of the robo-adviser’ session at Sibos in Geneva (which you can view below), IBM’s Thought Leader of Wealth Management Investment Analytics, Paolo Sironi, made the point that his grandmother, who has never turned on a computer in her life, now has an iPad which is unlocked by her fingerprint, allowing her to see how her investments and savings have grown.
Fellow panellist Edward Glyn, Managing Director at Calastone, said that choice is key for investors, highlighting that we need to use new technologies and channels to provide that choice.
There is a need to reduce the cost of overall investment management services, and technology can certainly drive down costs. But some investors may never feel fully comfortable investing without a human behind the decisions.
Ultimately, it seems that it’s a question of getting the right balance between man and machine. Be part of moving the discussion forward at Sibos 2017 Toronto.