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Optimizing your practice

Identify and amplify the strengths of your offer, tailoring it to meet client needs in the ways they find most helpful.

Optimizing your practice

Naturally, the needs of investors vary from one person to another. And the needs of your clients are likely to change as they progress along their investing journey. Our research suggests that an "either or" approach to digital advice ignores a great opportunity. Instead, you stand to potentially enhance your own efficiency while meeting the needs of more clients by appropriately embracing digital tools for routine tasks.

Why using technology can be a big win for advisors

Vanguard's latest study1 dives into the intricacies of value added by both digital and traditional advisors. It gives advisors crucial insights into how they may scale their business and how digital services can be integrated with traditional advice to optimize the client's experience.

The survey of 1,500 investors suggests that traditional advice, coupled with some of the advantages found in robo-services, can be used to better serve client interests.

There is also little difference across wealth levels for preference between digital and traditional advice. This suggests advisors can implement attributes of robo-advice, such as artificial intelligence techniques, to meet many of the needs of wealthy clients, as well as those with smaller portfolios. Technology solutions are particularly suited for implementing portfolio tasks such as managing taxes and preparing for various risk scenarios.

Putting it into practice

Assess your practice for tasks and processes that lend themselves to being performed digitally—"portfolio value" operations such as managing risk-and-return characteristics, tax efficiency, and rebalancing.

Why automation is a big advantage for your practice

Human advisors' emotional connection is like the ace up their sleeve, and it leads to having strong perceived value and almost unwavering loyalty from their clients. Nonetheless, Vanguard's latest survey1 of 1,500 investors sees much untapped potential in advisors integrating digital services.

Investors showed a strong preference to have tasks such as portfolio construction, tax management, and diversification, as well as functional tasks, like consistent monitoring and account setup, to be delivered digitally. This survey data provides valuable insight as to where advisors can leverage automation to expand their practice.

If advisors align their services in accordance with this framework it gives them more time to interact with clients and build a connection, which is the bedrock of their strong relationships. It also frees up time for traditional advisors to meet more clients and expand their assets under management.

Putting it into practice

Incorporating the automation possible through technology is a no-brainer for advisors. Clients want a technology-enabled, automated experience for some tasks, and delivering on that frees up more time to give them better service in the areas where they desire a human touch. Plus, that extra time helps advisors grow their business.

Where to focus your efforts to better retain clients

There is a strong sense of loyalty from investors toward traditional financial advisors. A recent study1 from Vanguard provides critical insights as to how advisors can utilize their skills to retain clients.

Human-advised investors have substantially less time, ability, and willingness to manage their financial lives. Only 39% of investors with human advisors report having sufficient time to manage their financial affairs compared to 63% for digitally advised investors. On top of that, they are less than half as likely to have either the willingness or ability to manage their investments. Understanding these features of human-advised clients lets advisors know how best to interact with investors.

Advisors can bridge the gap between digital advice and investor preferences by utilizing automated services to run different market scenarios, prevent details or even entire accounts from being overlooked, and manage capital gains, among other tasks. These are places where clients want digital advice, and providing such services in an automated fashion helps save advisors time.

Putting it into practice

Capitalizing on digital advice in the areas clients want them not only provides more value but can help advisors manage their own resources more efficiently.

How to attract digitally advised clients

Many digitally advised investors feel they could be getting more from their service. A robust study1 from Vanguard demonstrates how and why an amalgamation of digital-human advice can attract new clients.

There's an inclination among the robo-advised to consider a human advisor in the future, and there are two predominant factors. The first is the substantially higher peace of mind investors receive from traditional advice (more than four times as much peace of mind added). The second is the added financial value that accompanies that increased level of comfort (over triple the perceived financial value).

Traditional advisors are in a better position to emotionally connect with their clients and foster relationships. A clear path to demonstrate that value is helping clients navigate the complexity in their portfolios as their lives evolve. While many digitally advised clients may have time to manage their investments, a traditional advisor can appeal to the robo-advised by showing their value in helping their clients reach their financial milestones.

Putting it into practice

Advisors can integrate digital advice to help provide a transition for their new clients who come from a digital-only background. This provides them an onramp to additional, higher-value services as their financial needs become more complex.

Where clients value automated versus personal advice

Vanguard's latest study1 establishes that most advised investors want a human advisor integrated into their financial future. The question remains as to where traditional advisors should optimize their client's experience and how to implement digital advice.

The study buckets advisor value into three categories: portfolio, financial, and emotional. Both digitally and human-advised clients report deriving significant financial value from their advice provider, according to the study. So when it comes to savings, spending behavior, or questions around retirement, both advisors and robos add substantial financial value to the portfolio; where they differ notably is in emotional and portfolio value.

Tax efficiency, risk/return characteristics, trading activity, and rebalancing are key portfolio management aspects in which a robo has a perceived edge. Importantly, these functions all are easier to optimize with technology. Additionally, human advisors offset this with an advantage in providing emotional value. Human advisors are better at establishing trust, making investors feel confident, and instilling a sense of accomplishment.

Putting into practice

Financial advisors are irreplaceable to the client experience. That said, the advantages of robos in some areas present an opportunity for advisors to consider augmenting services with digital advice. In these cases, technology can more efficiently serve a client while also increasing satisfaction.

Different tasks for different modes of advice

IVOA preference table graphic

Note: In this figure, all 1,518 clients answered the question. They were presented with four micro-interactions at a time, 12 times in different screens, and asked which they most preferred to be delivered by a human or digital service so that we could rank each micro-interaction as well as related preferences.

Sources: Vanguard and Escalent, 2021.

How to lower costs and scale your practice at the same time

Vanguard's research shows that robo advisors are in no position to replace the traditional advisor. However, the research does suggest ways that digital advice can augment traditional advice to increase efficiency and grow a firm's assets under management. This opportunity stems from how different advisor types best suit the client's needs.

Clients show a preference for having a robo advisor deliver tasks that are less personal and more easily automated. For example, the top three categories to be delivered digitally are to:

  • Simplify the portfolio for organized management.
  • Find details or accounts that may be overlooked.
  • Manage taxes or capital gains efficiently.

Advisors can make more time for the interpersonal client experience their clients value by integrating robo services and automating portions of the client experience. This will leave advisors with more time for enhancing their personal relationships.

Putting into practice

The fact that clients prefer digital advice in certain areas means there is a significant opportunity for advisors to adopt these services. Adding these kinds of technology to a practice will allow advisors more interpersonal time with clients and more time to develop new client relationships.

Vanguard Research
Quantifying the investor's view on the value of human and robo advice

Examine Vanguard's complete findings into investor's perceived value of advice by reading the research report quantifying the investor's view on the value of human and robo advice.

Learn more about our three themes

Have more questions? Contact a representative.

Disclosures and footnotes

1 Paulo Costa and Jane Henshaw. 2022. Quantifying the investor's view on the value of human and robo-advice. Valley Forge, Pa.: The Vanguard Group.


All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.