Just a year ago, our Alberto Cuccu wrote a post here, Robo-advisors Are Disruptive, but Hybrid Is Much More: It’s Transformational, citing research by Gartner. Our vision on the topic was (and still is) that roboadvisory has a role, but not as relevant as hybrid advisory.

A year has gone and we have another Gartner report to talk about, Integrate Financial Coaching to Create Real Value From Roboadvisor 2.0 Tools, published March 1, 2017. We are glad to see ourselves cited, together with a bunch of other companies, as vendors of Roboadvisor 2.0 tools. We can tell from the 2.0 moniker that we entered a new chapter in the history of roboadvisory. But why is this happening? And, more important, is our vision about roboadvisory and hybrid advisory still valid?

1.0: (not enough) Good

Roboadvisory is of course an interesting evolution in wealth management, but from the research we can deduce that the first generation of robo-based tools does not meet the basic requirements of the sector, i.e. financial coaching, goal-based planning, and proactive adjustments to changes in individual client and market conditions.

More, and better, work has to be done before roboadvisory can effectively satisfy the needs of clients in every wealth category. At the moment, roboadvisory services are essentially non-existent above the mass affluent households level. As far as High-net-worth households (HNWH) and Ultra-high-net-worth households (UHNWH) are concerned, financial coaching and investment personalization are provided directly from the advisor, with very little or no help from Robo-based tools at all.

Working Towards a Good 2.0 Roboadvisory Proposition

It is one of our strategic goals to work in order to take good robo-based services to the next level of integration and sofistication. We are indeed well poised to achieve such an objective, since our offering already meets many requirements for 2.0 roboadvisory like multichannel access, or goal-based planning and portfolio balancing.

Meanwhile, we stay on the conclusions drawn last year by Alberto. He stated Wealth Management Will be a People and Machine Business, something that goes along the takeaways kept from reading the Gartner report, from which we can deduce that roboadvisory 2.0 is necessary, but – especially in the upper segments of the market – it will be another tool for the advisor, deeply integrated in the organization and refined enough to be able to provide self-direction and automated coaching to the client.

At the same time, in no way this is going to replace the advisor’s role and importance where the best results are to be reached. Hybrid advisory is the way to go in the coming age of roboadvisory 2.0.