Is it the end of the road for human workers?
It is the era of artificial intelligence. Labour work has been taken over by efficient, precise and non-emotional robots. Similarly, the career paths of financial advisers are in jeopardy due to the increase in the usage of robo-advisors.
Robo-advisors in the financial world were first brought into practice by two US companies; Betterment and Wealthfront. At present, around $2.6 billion of assets under management are governed by these companies. This result led several other major banks, asset managers and brokerage firms into embracing the technology of using robo-advisors, as they offer financial and high-quality personalised advice. In the US, there has been a rapid growth of around 500 percent between 2014-17.
Furthermore, robo-advisors depend on algorithms (automated software) to generate portfolios and administer advice to clients on investment options accordingly. The beneficial factors of using a robo-advisor include efficient and easy-to-use online investment services, as well as affordability. Additionally, robo-advisors assist with the set-up of more effective and productive mutual funds known as exchange-traded funds (ETFs). ETFs are inexpensive and simple to use.
Since corporations have to adhere to customer requirements, companies are taking the step to initiate the usage of robo-advisors. This phase acts as a concern for many financial advisors putting their careers at risk. Moreover, even though robo-advisors are limited to specific skillsets, they are expanding in their knowledge and will soon be capable of downloading social media data and client’s banking transactions, while offering advice on long-term financial goals and methods in which they can be achieved. As of now, robots are managing around $100 billion worth of assets and by 2025, predicted to be managing 10 percent of assets.