Robo-Advisors Replacing Humans: Will it Ever Come to That?

Published on December 6, 2024

Financial advice can be a sensitive topic – those giving it don’t want to mislead customers, while customers are wary about the level of trust they can place in their advisers. Nonetheless, done correctly, investing can be a very beneficial way for someone to use their funds.

Having explored how AI can make the wealth tech industry more reliable, we now look at robo-advisors’ impact on traditional financial advisors and explore whether they will ever completely replace humans.

The future is hybrid

Harry Folloder, chief digital and technology officer at Alorica, the customer experience solutions provider, identifies pros to robo-advisors but explains that the lack of “emotional IQ” is ultimately what holds the technology back and will stop it from completely replacing human advisors.

“Robo-advisors bring undeniable value with their cost-efficiency, scalability, and accessibility, offering financial guidance to a broad demographic, often at a fraction of traditional fees. They excel in routine tasks, like portfolio rebalancing, and provide data-backed recommendations in real-time, appealing especially to tech-savvy investors.”

“However, the complete replacement of human advisors is highly unlikely and ill-advised. Human advisors offer a personal touch, understanding clients’ nuanced needs, life circumstances, and emotional reactions to financial changes—something AI struggles to replicate – call it a special kind of emotional IQ that only humans can deliver.”

“While robo-advisors may handle transactional advice well, humans provide in-depth, holistic financial planning and reassurance during market volatility and offer that soft-skill touch that many customers still find solace in. Ultimately, the future likely lies in hybrid models, where AI handles routine processes while human advisors focus on complex, relationship-driven advisory roles, allowing clients to benefit from both technological efficiency and a personalised journey.”

Read full article here.

Alorica Inc. (“Alorica”) is the holding company of various direct and indirect subsidiaries, including Systems & Services Technologies, Inc. (SST), NMLS 950746. Many of Alorica Inc.’s subsidiaries operate under the brand, Alorica, but all remain separate legal entities.