Robo-advisers are struggling to find customers and one explanation is that people prefer the human touch when getting financial help.
But who are these humans we turn to for advice in understanding the complexities of investing, retirement and other matters? A new study from the industry consulting firm Dalbar Inc. shows that a lot of them are just salespeople, who want to sell mutual funds and guaranteed investment certificates.
Brilliant people – smart, prepared, sympathetic and insightful – work in the financial planning and the investment advice worlds. But they’re outnumbered by legions of people who either by personal choice or corporate edict have made it a priority to sell, not advise. Robo-advisers beat these product-sellers any day of the week, month or year.
For insights into what you’re getting when you see a human adviser, let’s take a look at Dalbar’s analysis of how major financial institutions serve people who want help with retirement planning. Dalbar had 192 mystery shoppers call their bank and ask for an appointment, which means the banks had the opportunity to put their best foot forward.
Royal Bank of Canada aced the test – 83 per cent of the mystery shoppers who went there for a retirement discussion saw someone with either the certified financial planner (CFP) or personal financial planner (PFP) designation. At the other four Big Five banks, only between 13 and 43 per cent of interactions were with a CFP or PFP.
If not an accredited…