Is there a future in virtual advising?

What's a better investor, an algorithm or a person? Sure, that's a bit of a loaded question, but it's still a query that many clients are asking today.

This topic is on their minds because of robo-advisors - or algorithms that can dish out investment advice as fast as you can type - and naturally, financial advisors are worried that their business will slowly turn over to technology.

While yes, robo-advisors are gaining popularity, they will never be able to totally replace the value of the human touch. However, financial advisors (the human ones) can learn a thing or two from robo-advisors and capitalize on new technology to better work with clients.

Technology attracts younger clients
Today, instead of turning into a robo-advisor, professionals are increasingly becoming "virtual advisors." They are leveraging technology to connect with clients, and in most cases, they never meet face-to-face - only over the Internet.

"Millennials lean toward virtual advising."

Given the prominent integration of technology into wealth management and financial advising, budding virtual advisors can learn from robo-advisors. One of the most obvious trends seen with robo-advisors, and technology as a whole, is that it attracts a younger clientele.

For example, robo-advisors naturally provide services online alone. Millennials, many Gen Xers and even some Baby Boomers rely heavily on technology, especially the Internet, for convenience and research purposes. Using that same technology to your advantage is a smart way to connect with this younger audience.

Of course, channeling robo-advisors and leaning on technology has the ability to increase convenience and speed, but it also can save money. Creating a virtual firm has lower costs than a brick-and-mortar shop, and that can lead to lower fees for your clients - yet another way to attract more people to your services. 

Find a balance between tech and the human element
Robo-advisors aren't without their faults. We all know the real value of the human element in wealth management, especially as the concept of money is so ingrained in our personal lives. However, advisors can still find a balance between the best parts of robo-advisors - namely the technology and convenience - and the best parts of the human financial advisor.

That balance could even be a virtual advisor. Professionals have ditched the office altogether, instead opting to work from home and connect with clients over the Internet. Like robo-advisors, this allows clients to have access to financial guidance through technology alone, but it still retains the customized advice, the personal relationships and the in-depth strategies provided by actual financial advisors.

The key elements of a virtual advisor - outside of a computer and the Internet - include:

• Skype - Skype, or a similar video chat service, is necessary to have that face-to-face connection without actually meeting in person.
• Email - Many virtual advisors meet first on Skype, then follow up via email.
• Blog - Online is where meetings take place, but it is also where marketing takes place. A blog is a main part of that.
• Social media - Connecting with clients can be facilitated through social media. However, avoid giving financial advice via social media for security purposes.
• GoToMeeting - This online meeting program allows for conference calls and computer-screen sharing.

Through all of these elements, a virtual advisor isn't a robo-advisor. They are just a professional who uses technology to streamline the client relationship and work with clients on their terms.

Virtual advisors find success
While most financial advisors use technology to some degree, there are those that exist solely because of technology.

One is Sophia Bera, a Minneapolis-based financial advisor. Bera spoke to Reuters about her experiences as a virtual advisor, and pointed out that she has barely met any of her clients in person. Instead, she operates online and through Skype. Of note is the typical age of her clientele - most are on the younger side.

"I work with clients in their 20s and 30s around the country," Bera told the media outlet. "We use Skype meetings and email follow-ups, and it works out really well."

One of the best parts of working with Bera is the convenience. Clients can meet with her on their schedules, not having to worry about juggling work, home and play with their wealth management needs. The various tech services offered by Bera make it much easier to connect on a regular basis.

Tech provides means for personal connections
Sure, technology makes the lives of financial advisors a whole lot easier. What it doesn't do, however, is replace the need - and the importance of - personal connections in wealth management.

However, virtual advisors can still have those connections, albeit through technology. Factors worth paying attention to include:

• Body language
• Messy/neat office
• Personal appearance
• Professional decorum

This is why many virtual advisors turn to video conferencing tools, like Skype, to conduct business. It is easy, fast and cost-effective, but it also provides a way to see and connect with the person on the other end.

Using tools like Skype is important because they help build trust, and trust is one of the most valuable components of an advisor-client relationship. While technology can be lacking that personal connection - like with robo-advisors - virtual advisors can use technology without losing the personal side of wealth management.

"Technology can be ut​ilized by the traditional financial advisor."

What is the future of virtual advising?
Robo-advisors may not get financial advisors excited, but there are lessons that can be learned from the popularity of these tools. Of course, one is that technology can be immensely beneficial for professionals. It can make the job easier and cater to clients' diverse needs.

With this said, it seems that virtual advisors - and yes, robo-advisors as well - are here to stay. In fact, you may want to incorporate a number of elements shared by these methods into your current business model. 

Virtual advisors can have:

• More efficient meetings
• Lower costs and fees
• More flexible schedules
• More diverse clientele
• Wider range

When thought about from this angle, it feels like the future of virtual advising is bright. And if you want to begin to work some aspects of virtual advising into your current methods, the best place to start would be with technology.

To learn more on this topic, register for our Certified Wealth Strategist® program.

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