Advisers: Robo-advice ‘no threat’

By Daniel Lanyon on Thursday 23 November 2017

Alternative Lending

Research by Aegon has found financial advisers are less worried by digital disruption than you might think.

Research by Aegon has found financial advisers are less worried by digital disruption than you might think.

More than three quarters of financial advisers are confident that robo-advice offers no threat to their business, according to recent research by Aegon, despite nearly half of financial advisers expecting more demand for robo-advice over the next year.

The firm’s Technology in the Financial Advice Market report found a decisive 78 per cent of the 252 advisers surveyed are not threatened by the trend but nearly a third – 31 per cent – do point to robo-advice and similar digital services as one of the top challenges to the wider industry over the next two years.

Drilling deeper, the report found financial advisers whose client portfolios are at the lower end in terms of size are more alert to the threat from the lower cost option of robo-advice.

For advisers with client portfolios of more than £200k, 88 per cent feel it offers no threat to their business, and even for portfolios of up to £100k, the figure remains high at 73 per cent.

Advisers who manage less than £5m in client assets are three times more likely to feel threatened by the technology than those who manage over £100m (63 per cent vs 20 per cent), suggesting advisers with less scale consider the new technology as more of a challenge to their business.

Steven Cameron, Pensions Director at Aegon says the increasing use of technology in financial services is essential to engage customers in the future and also provides opportunities for  firms to find new ways for people to access advice.

“This innovation has real potential to enhance adviser businesses, providing parallel advice and guidance offerings that can benefit customers and help close the advice gap,” he said.

“The poor customer take up of pure robo-advice propositions in the market today highlights the ongoing importance of the human aspect of an adviser’s service. For this reason we see robo-advice technology as being most likely to represent an opportunity for advisers to complement their offerings, and not a threat.”

He says customers will increasingly come to expect digital services alongside traditional advice and therefore all advisers should be embracing technology today.

“Providers need to support intermediaries to create a successful market for advice and we believe robo developments will prove to be healthy for the adviser industry. As advisers grow used to the new innovations, they should prove to be a useful and valuable extension to face to face financial advice,” he added.

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