Roboadvisors Can Disrupt Investing with a Human Touch

canstockphoto3621509By now, traditional investors are familiar with the threat coming from roboadvisors. The fees and barriers to entry are lower, and millennials can do it all from their smartphones. But roboadvisors face considerable challenges of their own.

Among other issues, all wealth management players face steep customer acquisition costs, which presents a particular problem for robo startups.

“Standalone roboadvisors do not have a value proposition,” Matt Harris, managing director of Bain Capital Ventures said this week. This leaves partnering with the big players.

The major players are rolling out roboadvisors of their own, but the problem is that most lack the “human touch,” according to Jane Barratt, founder and CEO of the investment management platform GoldBean, a graduate of INV Fintech, this site’s sister accelerator.

“Most robo value propositions are not dissimilar to traditional advisors,” Barratt told Bank Innovation. “They say, ‘Give us your pile of money and trust us.’ The problem is, there are finite piles of money.” Most wealthy people have already allocated their money, so they are chasing smaller piles with the same offering, Barratt said. “Plus, the cost of acquisition is prohibitive.” Part of GoldBean’s offering is software and content that helps banks transition retail customers to wealth management customers through education and and connecting brand affinity to investing, which helps first-time investors better conceptualize what they are doing with their money — betting on companies they already support with their patronage.

“Saying, ‘Just give me your money,’ is inherently anti-human,” Barratt said. The algorithms and the PhDs that wrote them are missing the conceptual leap humans have to make when investing. That leap, Barratt said, is the potential investor saying, “I have worked really hard and saved my money and you want me to give it to you because you are saying, ‘Trust me.’ People want to know who to trust and they want the confidence and skills to be able to measure how they’re doing.”

As institutions go robo, they should remember the human touch does not necessarily refer to human advisors as much as it does understanding the human feelings of the investor.

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at

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