Democratizing Investing with Robo-Advisors: Navigating Market Volatility

Wealth advising in times of market volatility is an art, one that requires a balance of personal wisdom and decades of data. Market volatility can stir a lot of anxiety, and oftentimes causes investors to act in ways that they typically wouldn’t. Some are quick to be reactive, compromising years of progress on their investments. The adage, “it’s not about timing the market, but about time in the market,” is true, and robo-advisors can help people spend more time in the market. Robo-advisors democratize investing and create a sober approach to navigating market volatility.

Robo-Advisors: The Rational Response to Market Volatility

Traditionalists will ask, are robo-advisors trained to handle volatile situations? How can advisors be sure that robo-advisors are capable? Think about it this way: It’s not really about if the robo-advisor can make a decision in a crisis situation. The robo-advisor is a superbly trained program that relies on vast data to make decisions. It gauges a variety of factors, based on customers’ individual needs, as well as most of the financial market, and can evaluate thousands of investment options. To the robo-advisor, a volatile market is simply a set of data points. Robo-advisors can be excellent assistants, critical even, in times of market volatility because they can assess risk quickly and accurately.

Should You Use a Robo-advisor When the Market is Volatile?

Robo-advisors can be helpful in navigating market volatility because they are innately data-driven in their decision making, and are constantly trading and rebalancing decisions. Robo-advisors are useful in times of market volatility because they are both vetted by real wealth managers, and they can respond rapidly to turbulent situations, using vast data and analytics. Additionally, robo-advisors, by design, are automated and oftentimes offer services that investors wouldn’t be able to without substantial time spent.

The Power of Human Connection in Financial Advisory

Human advisors are of the utmost importance when markets are volatile to do precisely what robo-advisors cannot: communicating with thoughtfulness and empathy. As an advisor, you will naturally endure times when customers lose money. This is difficult on many levels for them to deal with, so be sure to take on the role of communicator, to help name what is occurring and how they can move forward. One of the reasons that Qdeck was born was because we saw the disconnect between human advising and robo-advising. Having strong human relationships in which you can communicate the value of data via robo-advising is essential in order to cultivate trust. You should be constantly communicating with customers, anyhow, so you will simply continue the cadence of support and attentiveness when things inevitably become difficult.

Advisors with decades of experience have witnessed financial instability in the past. They have seen the market during grim times, and they have witnessed the upswing. With this experience, they have a special sensitivity to how customers behave and respond to certain situations. Advisors should always serve their customers’ best interests, which comes only from the longstanding relationships between advisors and customers. Advisors are equipped to have the difficult conversations, and leverage their expertise to guide their customers through the most challenging times.

Balancing Automation and Human Touch: Ensuring Customer Satisfaction

During volatile times, it’s important to redirect the conversation back to the customer and their original goals. Checking in once again to see if anything has changed, in response to the market volatility, is essential. Most likely is that their goals are effectively the same, and that the instability in the market is spooking them. Encourage customers to stick with their original financial plan and to do their best to accept changes that will eventually level out. Explain to them that, when the original strategy for their investments was conceived, market volatility was factored into the equation.

While you, as an advisor, understand that all things level out in the market over time, listening is key. In addition to assuring customers that things will be okay, and that any necessary changes have been made, simply hear their concerns and validate them. This is one of the things that a robo-advisor obviously cannot do, and as more automation is brought into fintech and other industries, it is human connection that will ensure your value to your customers. Consider employing QadvisorGPT to draft more frequent emails if you think that a more consistent cadence will bring your customers comfort.

As you work to balance your experience and wisdom with the automation a robo-advisor can offer, think about how to maximize the best of both worlds to provide a superior experience for your customers. The market will inevitably become volatile, and, like a stormy ocean, calm down once again. Remind your customers that, because they have chosen a human-driven, technology-enabled approach, they are positioned to overcome challenges and meet their financial goals in the long run.

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