A recent study suggests that if financial advisors want to compete with robo advisors, they may need to become "financial therapists".

Management consulting firm Ernst & Young (EY) has published a report warning advisors that digital advice is inevitable for certain market segments, and says more transparent newcomers to the financial service industry could steal clients away from traditional advisors.

"Clients overwhelmingly identified transparency of portfolio performance and fees as the top driver of trust," says EY "However, clients are pushing the envelope on what transparency means to them and are eager for a new level of public transparency. Clients are eager to rate their advisors and connect with like clients in public forums. Traditional views of transparency are no longer enough."

Dissatisfied with the way they are charged

What kind of performance do clients expect? The survey of more than 2000 investors reveals that more than half think their portfolio return should either equal (28%) or outperform (35%) that of the market index. The remaining respondents measured performance according to how well their portfolios were meeting their own specific financial goals. As for fees, EY says about a third of clients are dissatisfied with the way they are charged and roughly a quarter of clients are not sure how they are being charged.

While EY says its research does not suggest there will be a wholesale shift in pricing from asset-based remuneration and commissions to fixed fees, it does suggest that human advisors will need to prove their worth if they want to compete with online platforms that offer low, easy-to-understand fees.

To spend less time providing advice

"Advisors will need to spend less time providing standard asset allocation advice and other activities that can be automated by an algorithm or a robo. They will need to spend more time calming jittery nerves in choppy markets, helping clients drop bad spending habits and increase savings, assisting clients through a divorce and providing clients with the tools to achieve life and financial goals," concludes the report. "In essence, the role of the financial advisor may become more like a financial therapist in the future"