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Robo-advisors not ready to replace humans - Credit Suisse exec

26 October 2016  |  12596 views  |  6 Marco Abele, Credit Suisse

A wave of new digital tools will complement, not replace, finacial advisors, according to senior Credit Suisse exec Marco Abele, who says it's not yet time to worry about the rise of the robo-advisors.

In an inhouse Q&A, Abele, who is head of digital private banking at Credit Suisse Switzerland, insists that digital and analog are "not binaries" and that new technology will help advisors by taking on repetitive admin, leaving more time for clients.

Some of the bank's advisors began piloting new technology this summer, using tablets with speech recognition that takes over documentation, freeing up staffers to focus on clients. The tablet also gives advisors virtual access to experts who can be digitally brought in to answer any questions.

"What is special about it is that we did not roll out a ready-to-use solution but rather one that the client advisors themselves can help to design. Ultimately, we want the technology to be the perfect support for our advisors," says Abele.

This means that advisors are not likely to be replaced by robots in the near future. Despite much hype, independent robo-advisors only manage around $20 billion around the world, although this is expected to rise to $450 billion by 2020.

Abele notes that most of these platforms are focused exclusively on exchange traded funds, making them inadequate for many clients, while they are also geographically limited - many of them in the US, which is not "consistent with the security requirements" of most Swiss clients.

Even when automated advisors overcome these problems, humans will still have a place, with the technology allowing them to offer tools to less wealthy people - something another Swiss Bank, UBS, has started doing in the UK.

More generally, Abele calls fintech firms "no small phenomenon" but is sceptical on their chances of replacing banks, largely because they focus on only a part of the value chain. He suggests that cooperation is the best route for both sides.

But banks must still be vigilant: "The generation of today's 15- to 35-year-olds seeks out the offer that suits them best. Whether that offer comes from a 160-year-old bank or a social network is completely irrelevant. We have to offer the best solution or they will go somewhere else."

Comments: (6)

A Finextra member
A Finextra member | 26 October, 2016, 09:30

As a Robo-advisor, I disagree with this Human Exec!

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Adrian Sharp
Adrian Sharp - Teradata - New York | 26 October, 2016, 15:34

I think the $ millions , should read $Billions - Betterment alone is over $4 billion in 2016 ?

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 26 October, 2016, 19:04

The first robo-advisor I came across was Covestor in 2007. That was followed by KaChing a couple of years later. Personally, ever since I went online for stock trading in the late '1990s followed by online financial investments (IPO, bonds, etc.) in the early 2000s, I've never felt the need for a human stock broker / financial advisor. I just can't understand why the aforementioned pioneering robo-advisors didn't take off and why there are still doubts being expressed about the current crop of robo-advisors.

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Melvin Haskins
Melvin Haskins - Haston International Limited - | 26 October, 2016, 19:46

I agree - I have no need for an advisor. In fact, my experience of financial advisors is poor. I gave up after poor advice and do my own research.

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Matt White
Matt White - Finextra - Toronto | 26 October, 2016, 19:47

@ Adrian - yes, it's billions, not millions. Our mistake.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 26 October, 2016, 20:09

When a British celebrity with a £26M bank balance didn't merit personalized service, it's high time Private Wealth Management got disrupted by robo-advisors.

http://qwt.io/s_ketharaman/Gfqb

On a side note, justifying human financial advisors on the ground that US-based robo-advisors are "not 'consistent with the security requirements' of most Swiss clients" is quite lame. Traditional suppliers of financial tech to banking, including a former employer of mine, have found perfectly legal ways to work around such constraints over a decade ago. Once the fintech valuation froth fizzles and the new-age fintechs are forced to shed their cowboy styles and get serious about facing the regulatory realities in the banking industry, they will, too.

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