This post is part of our series for advisors to pass to their clients. Knowing more about your clients’ needs will help you to better serve them. Aging doesn’t have to be scary, and we here at Ashar want to help you provide the resources that policy sellers need to flourish in this chapter of their life.
Would you let R2-D2 do your taxes? Could the Iron Giant be your tax attorney? If he asked, would you let Optimus Prime take care of your investment portfolio? While these sound like ridiculous questions, we’re in an era where you can now enlist robots to be your financial planners.
When it comes to financial advice, one size definitely does not fit all. Luckily, we live in a time where choice flourishes, and the consumers are the ones to benefit from this influx of options. Is it wise to entrust your assets to an automated system?
Tricia Rothschild, Morningstar’s expert on automated investment advice, says that this growing trend is “an evolution, not a revolution.” In other words, this digitization is a natural progression of the market, but robo-advisors aren’t set to replace the need for human advisors.
Rather, they are acting as a low-cost strategy for anyone intimidated or uninformed about the process. Some people, particularly Millennials, are more comfortable interacting with technology than with someone they see as a salesperson. However, this development may slow as the investment industry moves toward fee-based asset management rather than commission-based. Surprisingly, one well-known robo-advising company says 20 percent of its customers are retired or approaching retirement age.
In a video for the Wall Street Journal, Ms. Rothschild compares the role of robo-advisors to a fitness regimen. She says, “You can wear your FitBit, you can count your steps, you can do all sorts of good things, but at night when you’re alone and tired or whatever, you might binge on the cookies. Sometimes having a trainer or coach or another person in your life that you’re talking to about those choices will hold you accountable.” A human financial planner can help you visualize your future goals, engage in the process, and motivate you to achieve these objectives.
Digital advisors may fill the gap as older, experienced Baby Boomer advisors begin to retire. Robo-advisors are most popular among those with less than $100,000 of investable assets. They act as access points for anyone who prefers a “set it and leave it” method of investing. Digital advisors will probably make human advisors lower their fees in coming years, which is good because clients with high net-worth will always require personalized advice.
Digital advisors can’t replace a human’s ability to make a comprehensive life plan. They’re also less accountable than a flesh-and-blood advisor, who knows that money isn’t just money—it’s your retirement fund, your healthcare costs, your vacation to the south of France, your beach house. A financial planner can help you envision your goals and find ways to make them happen.
To sum it up, robo-advisors may be best for those with less than $100,000 in manageable assets. They’re often cheaper than human financial planners, but come with several major drawbacks. Where Ashar Group is concerned, robotic advisors also have one additional deficiency: they can’t advocate on your behalf during a life settlement transaction. We realize that ethical life settlement brokers want their clients to have proper counsel to protect their best interest.
If you’ve decided you want to sell your life insurance policy on the secondary market, talk to your trusted financial advisor today.