From Robo Cop to Robo Advisor to…Robo Agent?
How likely is the rise of the Robo Agent and what can Boutiques do to stay relevant?
The Robo Advisor
Not long ago, the investment advisory business was taken by storm with the introduction of “Robo-Advisors” that combine time-tested, traditional wealth management strategies with automation to lower fees and open investing to broader masses.
The natural follow up question was, “What happens to the financial advisor?” moving forward? Leading robo-advisors such as WealthFront and Betterment (with offerings by stalwarts such as Charles Schwab and Vanguard) appeared prime to dislocate the advisor, and their fees, from the equation. Benefitted by a long bull run that made it near impossible for human advisors to beat the market on an after-fee basis, speculation continued to grow, then slowly started to fade.
The reason for this is, as advisors always knew, robots can’t do it all, especially when it comes to the emotional support required in investing and educating clients. No robot can intelligently decipher risk aversion and advise against and educate to clients’ cognitive and emotional biases, respectively.
Robo-advisors have been welcomed in most advisor communities as a cheap way to garner clients: for those who do not have significant assets, and therefore minimal fees to the advisor, they can be set up on a robo-advisor account cheaply, and monitored by the advisor until the client has garnered significant assets or financial situation to require a fee-based advisor.
Much of the same is happening in the Real Estate Industry now. How likely is the Robo-Agent and are there ways to adopt these types of technology to the benefit of the agent community?
The Robo Agent
According to Forbes, investment capital in the Real Estate Industry soared to an estimated $5B in 2017, from merely $33M seven years prior. It’s safe to say the world’s largest asset class is about to get a lot more advanced. While many are watching the iBuyer movement, there are plenty of tools ushered in by the big-data era that are beneficial to agents. These include predictive CRMs and chat-bots, collaborative client workspaces, analytics tools, and end-to-end platforms.
We’ve discussed at length the fact that the role of the agent is not disappearing any time soon, and instead is likely to be strengthened by technology. The role of agents will undoubtedly change, which with low inventory and an impatient Millennial client base, requires the adoption of technology more-so now than ever, and has shifted the role of agent from listings gatekeeper to advisor and technology enthusiast.
The Real Estate Advisor
Technology will enable agents to shift to a consultant role, one that moves from quantity to quality, and further along the service-oriented spectrum. Buyers and sellers are more educated when it comes to what they want, but are still lost when it comes to how to get it. Between home searching and closing is ripe for automation, including virtual tours and agent-less showings.
More on the Industry: Will Redfin’s Business Model Dominate?
Agents at boutique firms with boutique budgets will likely face an identity crises brought on by the challenge of meeting a technically-inclined client’s needs with antiquated or inferior tools. Furthermore, how will boutiques offset the appeal of Compass and it’s war chest of cash and (self-claimed) innovative end-to-end platform for it’s agents? We have plenty to say about this at Homebloq, where we’re building technology to fill this gap.
All agents and industry stakeholders will be impacted by technology to some degree. Those who are not prepared may be washed out completely. Listen and be aware of what your clients need. Here’s some insights into what clients are demanding from their agents.
What do you think — how likely is the rise of the Robo Agent? How are Boutiques to appeal to agents without an impressive technology offering?