The rise of robo advisors (automated advice) is shaking up the conservative wealth management industry. While automated advisory systems have mainly been used by fintechs and other global investment managers to serve the mass affluent demographic, these tools will likely grow in sophistication and relevance to high-net-worth and ultra-high-net-worth (HNW and UHNW) investors, particularly younger generations.
Robo advisors could also help established wealth managers expand their services to the mass affluent/emerging wealthy client base if they intelligently realign their business models. By combining the human touch of an experienced advisor with the logic, fee transparency, methodology and accessibility offered by a robo advisor platform, established advisory firms can significantly strengthen their practice models. In this hybrid model, wealth managers combine low-cost automated portfolio management with high-touch services such as comprehensive financial planning strategies.