In spite of all the hype about robo-advisors on the financial-services industry, nearly half of the financial professionals surveyed recently cite no impact on the industry, according to a survey by LIMRA.

Nearly every day, there are articles about robo-advisors and their potential impact in various financial news media. However, LIMRA’s survey reveals that nearly half of the financial professionals it surveyed view robo-advisors as having no real impact on the industry.

Unlike robot portrayals in science fiction, a robo-advisor is a service that provides automated investment advice to clients.  Clients provide their investment goals and risk tolerance, and the robo-advisor uses algorithms to provide portfolio management advice, all without a human financial planner.

LIMRA surveyed more than 300 financial professionals--from career and independent insurance agents/advisors to independent investment advisors.  Nearly 7 in 10 career and independent insurance agents are not familiar with the capabilities of a robo-advisor.  By contrast, 71 percent of independent investment advisors are familiar with them.  This dichotomy is not surprising since robo-advisors are currently used only for investment management.

While investment advisors may be more familiar with robo-advisors, 8 in 10 are not leveraging them currently and have no plans to do so in the immediate future.  Among insurance sales professionals, 9 in 10 are also not leveraging them and have no immediate plans to do so.

Even though robo-advisors are still fairly new to the industry, their potential could represent an opportunity for forward-thinking financial professionals and a threat to complacent ones.

The current users of robo-advisors tend to be young and more sophisticated about investments.  To financial professionals, they also represent tomorrow’s clients.  Financial professionals who include technology-driven alternatives in their practice have a better chance of retaining these new investors.

Earlier LIMRA research noted how consumers want a seamless, omni-channel experience when they interact with financial-services companies. Financial professionals who leverage robo-advisors as part of their practice can more effectively meet consumer demands and give themselves a competitive advantage.

LIMRA