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Morgan Stanley's Gorman: Robos Can’t Replace Humans

September 29, 2017

Morgan Stanley’s CEO says robots will never replace humans in wealth management— just as Vanguard launches a digital tool for 401(k) plan participants, designed to act as an advisor using behavioral finance techniques.

Regardless of technology in the advice space, James Gorman says most of the firm’s 3.5 million clients would still prefer a human advisor, particularly for issues such as taxes and estate planning, Barron’s writes. Technology can certainly help the relationship between advisors and clients, but “where judgment, trust, emotion play a big role…it’s hard to imagine humans not being at the core of that,” he said recently at a Wall Street Journal event, according to the publication.

Nonetheless, Morgan Stanley is launching a robo-advisor later this year for clients with smaller accounts, Barron’s writes. Gorman said about 2% of the wirehouse’s assets under management are in accounts with less than $100,000, according to the publication.

Vanguard, meanwhile, has unveiled a new online portal to help defined contribution plan participants prepare for retirement, the company says in a press release. The platform aggregates account data, including outside assets and Social Security, and, taking into account estimated future contributions as well as capital market forecasts, shows users how close they are to reaching their retirement goals, according to the press release.

James Gorman (Getty)

Using behavioral finance techniques, the tool also lets users run “what-if” scenarios, such as how their retirement income would change depending on the age of retirement, Vanguard says. In addition, the platform creates personalized “nudges” to help clients who get off track, by suggesting they increase their contribution rate, according to the press release.

By Alex Padalka
  • To read the Barron's article cited in this story, click here.