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Meet Rosie, the Robo-Advisor

Putnam Investments , 8/19/2014


Meet Rosie, the Robo-Advisor

Guest Blogger April Rudin is president of the Rudin Group and a blogger for the Huffington Post and WealthManagement.com. This article originally appeared on LinkedIn.

The emergence of so-called “robo-advisors” – online platforms that provide investors with analytical tools for creating their own financial plans and investment portfolios – has been creating a ripple of concern within the wealth management industry. In a recent CNBC article, industry professionals called the trend “no immediate threat” to financial advisors, but “a force to be reckoned with” as they increase the pressure on advisors to prove their worth to their clients.

To be sure, there are some aspects of the advisor-client relationship that a robo-advisor as of yet can’t provide to clients – such as empathetic concern about upcoming medical expenses or joy over the college graduation of a client’s child. But this has made me wonder: What if a robo-advisor could provide this type of relationship? What if robo-advisors could be programmed to show the qualities that clients have come to appreciate in female advisors – traits like empathy, patience, and sensitivity? Then I started to picture it – or her, if you will: Meet Rosie, the Robo-Advisor.

Rosie, who takes her name from the Jetsons’ lovable robot maid, would provide all the services that the typical robo-advisor offers, using calculators and algorithms to determine how to invest client money in diversified investment strategies, while providing clients with an interface for adjusting risk tolerance and setting goals. But Rosie would also do more, moving beyond a cold algorithm by having key features that are in line with wealth management being a relationship business, not a numbers business. She would:

  • Remember what’s important to your clients: Rosie would remember all the important dates and life-markers that are on the horizon – anniversaries, a child who is approaching college-age, retirement – and initiate financial preparations for these events.
  • Show concern for the whole family: Rosie would understand that a holistic financial picture includes more than just your client, but your client’s family, so her financial advice would take the entire family’s needs into account.
  • Listen empathetically: Is your client stressed about an upcoming expense? Worried that they are not saving enough to retire? Rosie would be there to listen and give advice on how to emotionally and financially handle these challenges. Best of all, she’s a robot, so unlike a human best friend, she would never sleep and would be an open ear 24-7.
  • Exhibit patience: Rosie may have showed the benefits of increasing an allocation to equities over and over again … but your client still doesn't get it. That’s okay, because unlike a flesh-and-blood advisor, Rosie wouldn’t mind.
  • Communicate well: Rosie regularly would check in on your clients and their financial well-being – without being asked, without needing reminders.
Of course, I know that an algorithm can’t “feel” concern or empathy. But what if someday it could be possible to design online interfaces that give the illusion of these qualities? That’s when financial advisors really have to worry – or make themselves a little more like Rosie before then.

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