The use of technology to provide investment advice is not new, but the practice is growing significantly. There is even a term for it now, “robo-advisors.” They are not, as the name suggests, robots, but human beings who use algorithms to manage their clients’ assets.

Firms who use these algorithms generally charge lower fees, and are also open to managing smaller amounts of money. So-called robo-advisors are a popular option for younger investors who are comfortable with technology and have smaller portfolios.

I don’t personally view robo-advisors as a competitive threat. They are part of the financial management ecosystem and are likely to grow in number, although at present they represent less than one percent of all assets under management.

I was recently interviewed on the subject by CNBC reporter Carleton English, whose article illustrated the relatively friendly relationship between robo-firms and traditional firms like ours. If anything the rise of this technology gives us the opportunity to focus more on the more personalized services that we do best, and that set apart Highland from other firms.

Concentrating on that expert, human touch is becoming more important, for not just Highland but many traditional firms.

John Christianson
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