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Halter Ferguson Financial Focuses More on Emotions as Robo-Advisor Growth Slows

Updated: Apr 23

It once seemed inevitable that the robots were going to take over the financial advisor landscape, but this day has been pushed back for now. Michael Kitces reports that after a blockbuster growth period in the 2nd quarter of 2014, asset growth in "robo-advisors" greatly slowed. Robo-advisors are where investors fill out a simple questionnaire, then a computer manages their assets for them.

Research still shows that emotions matter in financial planning and asset management

The traditional appeal of robo-advisors is among millennials who typically like to do things online. The thought is, "Why pay financial advisor fees for financial planning and asset management when a computer can do it for them at a fraction of the cost?" Even though the computer is doing the investing, the human still has emotions and overreacts to the news of the day. Halter Ferguson Financial did some research. If you go back ten years, the Vanguard 500 Index Fund averaged 7.50% per year. Investors in that same fund only averaged 3.95% because they sold at the depths of the crisis and bought when the market was much higher. (source: Morningstar Inc, 02/28/17)

"Until they come out with the robo-advisor that reads your facial expressions, the robots cannot take into account human emotion. People still need and want a guide to help them through the financial ups and downs," explained Brad Ferguson of Halter Ferguson Financial. In 2016 alone, there were two instances where robo-advisors restricted access to their platforms because people were trying to panic sell. "People want the financial peace of mind of knowing that a real person is managing their investments. They also want to know from the financial planner whether they have realistic financial goals." For more videos about how a financial advisor can provide peace of mind see: Halter Ferguson Financial's YouTube Channel

In the instance above, emotions cost investors a staggering 3.55% per year. As a result, Halter Ferguson Financial is focusing more on emotions with clients. Advisors can't read the minds of their clients. This is where the open-ended question is used. By asking clients about the thoughts and emotions around their financial goals, the firm can help them achieve those goals. If decisions are made on an emotional level--as they often are--it's important to know what emotions are driving a decision. Brad Ferguson, CFA, wrote more on this topic here How Conversational Leadership Transformed Our Client Experience

About Halter Ferguson Financial

Halter Ferguson Financial is a financial advisor in Indianapolis, Indiana. For more information, visit The firm is a fee-only Registered Investment Advisory that offers wealth management which combines financial planning and asset management. Halter Ferguson Financial is a fiduciary for their clients which means they are bound to put the best interests of their clients first.

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