DMS Keeps Financial Advisors from Yielding to Robo-advisors

By James O'Connor June 13, 2016 (Updated: August 22, 2016) Articles and Editorials

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Many fear financial advisors will become obsolete due to robo-advisor technologies. Ironically, another technology, DMS (document management software), forces us to reconsider that claim.

The Wall Street Journal recently reported that robo-advisors are posing a threat to their human counterparts in the financial services industry.

Financial services professionals worry their expertise will be rendered obsolete by the algorithm-based precision these robo-advisors bring to the marketplace, relegating humans in the financial services industry to the economic equivalent of cashiers and data entry specialists.

In fact, there hasn’t been such a resurgence of fear in humankind losing its proverbial battle with artificial intelligence since Garry Kasparov, arguably the greatest chess player who ever lived, lost a chess tournament to IBM’s super computer, Deep Blue, in 1997.

On one hand, the human brain and software are very similar: both are conduits for electrical activity—the brain’s synaptic, whereas software’s are silicon-derived.

On the other hand, at the threshold of each sits a world cognitive computing may never grasp: Although computer scientist and creator of modern computing, Alan Turing, proved nearly 70 years ago that computers are capable of ‘thinking’ as humans can, financial advisors aren’t doomed so long as they rely on DMS as a means to the following ends:

1. DMS Enhances Financial Advisors’ Already Superior Accountability

As human beings, financial advisors have an innate sense of accountability to their clients, whereas technology itself, without any human guidance, doesn’t. What’s more, money is never an asset in and of itself. Rather, it’s a means to another end whether that end be more vacations, fewer years to retirement, or a nicer car. Cognitive computing and robo-advisors alike cannot account for the value these items hold in the eyes of their users.

Working in unison with the human understanding of clients’ values, DMS helps financial advisors remain SEC and FINRA compliant, keep track of sensitive information, organize client materials effectively, and access critical information from anywhere there’s an internet connection. In other words, being accessible and reliable to clients through the right technology forges the professionalism and accountability which, in the hands of the advisor who possesses it, enables him or her to produce the staying power technology alone will never emulate.

2. DMS Yields Greater Value to the Advisor-Client Relationship

The adage ‘it’s all about relationships’ persists, and for good reason: Research has proven strong relationships, whether with family members, loved ones, or financial advisors, help us cope better with stress, and managing money is a stressful business for both financial advisors and their clients alike. What’s more, trust has brought humankind together for thousands of years. It’s a fundamental component of how we understand and relate to others.

DMS, in confluence with the benefits it provides as a technology used to go paperless, helps facilitate an advisor-client relationship built on value-added responsiveness—an advisor’s ability to rise to the occasion of a client’s requests with poise, knowledge, and understanding of the task at hand. Any financial advisor relying on paper to conduct his or her business will find it difficult to create value-added responsiveness in a way as profoundly impactful and positive. Although updating traditional service channels in other ways (such as for telecommunications purposes) can help streamline processes outside the context of documentation, most financial advisors understand the need to work from the point of filing and documentation outward when reconstructing their business processes.

3. DMS Abounds Operational Efficiency

The term ‘robo-advisory’ has become so pervasive in the finance industry that a term explaining the methodology of controlling it has come to the forefront, and this term is ‘robo-shield.’ Financial advisors are increasingly interested in how they can leverage the tools and strategies comprising ‘robo shield’ to their competitive benefit, and much of it has to do with any means that creates the operational efficiency to stave off the analytical superiority these robo-analysts are believed to possess.

For instance, Deborah Fox, the woman who coined the term ‘robo-shield,’ asserts that using ‘technology to be more effective and by creating operational efficiencies that will enhance client services,’ is crucial to financial advisors’ ability to stave off competition from robo-advisors.

At least as Fox contends, DMS can augment this robo-shield by way of the operational efficiencies it provides as a model for going paperless and reducing the amount of time spent searching for information. The metadata-enhanced retrieval features of DMS are integral to this outcome, and are even more intuitive (and effective) than search features inherent to windows operating systems.  Essentially, a well-organized financial planner with time to help sort the answers to your questions can take a client far, and DMS provides financial advisors with the time to make this a reality.

4. DMS Provides Security to the ‘Human Touch’

The ‘human touch’ isn’t a term to justify some false sense of security, it’s a term used to justify the true value of financial coaching that only financial advisors can provide. Otherwise, too much reliance on robo-advisors turns what would be a temporary problem into a major kink in a long-term financial plan.

What’s more, the stock bots that buy and trade within slivers of a millisecond can neither manage nor convey the psychological aspects of wealth. For one, cognitive computing can’t replicate human intuition—a form of intelligence where both the left and right hemispheres of the brain process information in unison.

This intuition lets financial advisors look at the entire financial picture, and assimilate clients’ goals into a broader system of portfolio management. To put it simply, financial advisors (in human form) are better equipped to handle the personal aspects of finance, which range from taxation and retirement to estate planning and will writing.

However, as powerful as the ‘human touch’ is, it must be complemented by technology insomuch that a middle ground is obtained. By keeping files and client information compliant, accessible, and secure, financial advisors accent their ‘human touch’ with the technology their clients can trust.

5. DMS Lets Financial Advisors Profit More, and with Lower Client Fees

In order to compete with robo-advisors, financial advisors must lower their fees—especially when attempting to widen their scope of services and expertise for a younger demographic. And in an age dominated by instant gratification, hefty up-front fees (as usually administered from fee-only financial planners) are overlooked (despite the advisor’s skillset) due to the excitement of low cost robo-advisors.

You can truly charge clients less money with DMS, though. Carlene Patterson, founder and CEO of Ascension Financial Group, reports that she saves $4,000 annually on storage alone—this is before accounting for the time saved on locating and retrieving information, and circumventing the costs of potential in-compliance issues.


This post is sponsored by eFileCabinet. Find out more at efilecabinet.com.

Image: MoneyBusinessImages

James O'Connor Author

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