A Shark dives deeper into crypto and demystifies DeFi - Issue 104

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TRUST THE HUMANS The Robots Are Not Ready


echnology is becoming more prominent and useful across the whole of wealth and investment management. Nonetheless, industry-leading research and market practitioners alike strongly suggest: humankind and the marketplace are nowhere near ready to shake free of the human connection. Robo-advisory, where more and more of investment decision making is being informed by artificial intelligence and then executed and supported on digital platforms is already wellestablished and certainly still on the rise. BusinessWire, for example, expects a combined average growth rate in robo-advisory services of over 40% between today and 2026. But it is not enough for investment and retirement planning to be carefully conceived. To be successful a plan must be fully-exercised – emphasis on execution. Here, a Deloitte report on robo-advisory and investment psychology shows that the machines may not be fully up to the task. Deloitte believes investors may of course be able to obtain valid insights from robo-advisors. But even so, they are left with “fraught” choices. These, the report explains, are decisions that remain “complex and difficult for humans in that they require specialist knowledge, are made infrequently, do not have immediate feedback, and have important effects that are only 44 / ADVISORS MAGAZINE

Ryan C. Olds, CFP®

A Customized Approach

Tailoring financial plans specifically for Ohio teachers, smallbusiness owners and medical professionals.

SEPT 2021

experienced in the distant future.” Put another way, you may lead a horse to water but you can’t make him drink. Ryan C. Olds, CFP® professional and principal at Ridgedale Financial Planning LLC in Northeast Ohio “welcomes” the rise of roboadvisory as it serves to, in general, increase knowledge and awareness in wealth management. Such tools can provide new investors with a better understanding of investment fundamentals and concepts. Gamification of financial education and planning can go a long way into helping people see what they have to do to get where they want to go. But, as he explains, such tools tend to fall far short when it comes to execution. “It is human nature to want a

personal connection,” says Olds. “You can go to a robo-advisor and maybe you have an 800 number to call, but you’re probably going to get a different person every time – they don’t know you and you don’t know them. Alternatively, when you’re working with an advisor like me, you can always call directly, but often, you don’t even have to make a call. When conditions change, when there’s something you need to consider, it’s going to be your advisor reaching out to you proactively.” Olds points to another benefit of working with a human advisor – access to a specialist. “Wealth and retirement planning is complex enough on its own but in addition, it’s always evolving. One of the things I love about this role

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