Robo-advisors using algorithm-based systems to provide financial advice to consumers will consign 25 million jobs in the financial and legal sector to the scrap heap over the next two decades says Bank of America, in a report which paints a bleak future for the human workforce as new robot workers transform the global economy.
The report says robots and other forms of artificial intelligence will take over 45% of all jobs in manufacturing and shave $9 trillion off labour costs within a decade, ushering in a new era of 'creative disruption'.
Billing the coming upheavals as a fourth industrial revolution, the authors say rapid advances in technology will cause a paradigm shift in the way society lives and works. “The pace of disruptive technological innovation has gone from linear to parabolic in recent years," states the report. "Penetration of robots and artificial intelligence has hit every industry sector, and has become an integral part of our daily lives.”
While much of the disruption will be felt at the bottom ends of the labour market, middle class jobs are also set to feel the pinch, says Bank of America, pointing to the growing use of robo-advisors in financial planning as a prime example.
The Millennial generation now 18-34 years old will be the first to switch en masse to these automated services, states the report. This rising cohort already holds $7 trillion of liquid assets and is likely to inherit another $30-$40 trillion from Baby Boom parents.
A new generation of wealth management firms such as Wealthfront, Betterment, Personal Capital, and FutureAdvisor are already luring away clients from the big banks with the promise of no-frills, low cost, advisory services. Around 60% of Bay Area-based Wealthfront's customers are under 35.
Many of the traditional wealth advisors are taking note, and Bank of America is no exception. The firm is understood to have put dozens of employees to work on an automated investment prototype for Merrill Edge, which targets accounts under $250,000, according to a recent Bloomberg report.