Venture capital has likely dried up for stand-alone robo-advisors. If so, where does the business of rob-advising go? Or said another way is robo-advising simply going to be the way advisors manage client accounts going forward?
Ultimately, the robo-advisor technology “disruption” trend is playing out in a remarkably similar manner to the great technology “disruptions” of the past, which also never actually disrupted advisors. In the 1970s and 1980s it was the rise of technology scaling discount brokerage that was going to put stockbrokers out of business. Instead, they simply moved on to sell mutual funds instead. Then in the late 1990s the online trading platforms that provided consumers direct access to mutual funds were going to put financial advisors out of business. Instead, they simply moved on to help with holistic asset-allocated portfolios instead. Now once again, technology is predicted to put financial advisors out of business, and instead it’s simply commoditizing the asset allocation component of the portfolio, and advisors are moving on to financial planning and wealth management.