Whether it is HAL 9000, Skynet, or HBO’s Westworld, popular culture has likely oversold the capabilities of machine learning and artificial intelligence, especially when it comes to retail investment management.

“We don’t like the term ‘robo,’ since it discounts the value of the advice,” said Mark Goines, vice chairman of digital wealth manager Personal Capital and who spoke during the SEC’s FinTech Forum. “Even robo-advisors are not robo-advisors. Sure, they automate certain tasks, but those tasks are automated by humans who figure out what the algorithms are, assign strategies, interpret data from people.”

According to a survey published by the CFA Institute in February 2016, half of industry professionals were either familiar or very familiar with robo-advisory tools, according to fellow panelist Jim Allen, head of capital markets policy group at the CFA Institute. “Just 16% were not at all familiar with the tools.”

The survey’s authors concluded that the mass affluent would benefit from the access to investment advice and a reduction in costs. However, they also noted that there were concerns over the quality of service and potential misselling of products and services.

“The CFA Institute does not see these technologies as necessarily harmful to investors,” said Allen. “In many ways, we see them as being beneficial for low-AUM investors.”

However, the concept that millennials are driving growth in this sector, which is expected to reach $2.2 trillion AUM by 2020, is not quite accurate, according to Ben Alden, the general counsel at digital wealth manager Betterment.

The average client for Betterment is 35, which is on the cusp of being millennials, but 30% of our business comes from people older than 50 years old,” said Alden.

“I don’t think that it is quite fair to say that this is right or not right for certain types of customers,” said Ben Alden, general counsel at digital wealth manager Betterment and who also spoke on the panel. “It depends on what that customer is looking for. It depends on whether they are comfortable with pattern investing and are comfortable with some level of technology.”

The average Betterment client is 35 years old, he added. “They are just on the cusp of being Millenials. But 30% of our business comes from those over 50 years old.”

Personal Capital’s Goines added that the average Personal Capital account has $300,000 worth of assets, but they also have accounts with approximately $5,000 worth of assets.

The nascent technology promises to automate several tasks financial advisors face, but Goines doubted that the technology would eventually replace human advisors.

“They’re not really advisors unless they can develop a personal relationship with their clients to make the appropriate decisions,” he said.”

 

For more on Robo-Advisors:

• AI Eyes Wealth Management
• Japan’s Robo-Advisors Need Diversification
• Retail Investors Seek Man-Machine Balance