Financial planners looking to stay ahead of the game might want to start investigating the many and varied benefits of fintech tools and robo-advice, with new research revealing that attitudes have changed regarding such advancements among those working in the financial advice sector.
Conducted by The Financial Planning Standards Board (FPSB), the study noted that planners are now less concerned with how disruptive automated advice systems might be and are now talking about how it could complement their businesses, the Financial Adviser reports.
It’s now thought by many that robo-advice could actually help them to remove bias and become more efficient and accurate.
Noel Maye, chief executive of the FPSB, was quoted by the news source as saying: “As the use of fintech tools grows, planners will need to clearly differentiate the value they provide over fully automated advice tools, so consumers understand what they’re getting from the automated tools and why life’s better when working with a [certified financial planner] professional.”
Fintech – also known as the financial technology industry – has been all about robo-advice for the last six months or so. It essentially involves moving investment and savings advice online, removing the need for person-to-person contact… although no robots are actually involved. It’s not just about dispensing advice either, some systems will also be able to invest people’s money for them.
It remains to be seen as yet whether consumers en masse will embrace this idea, but given that prices for services could be greatly reduced because of the automation factor, it’s likely that people will soon come round.
Another key point to bear in mind is the power of a second opinion for financial and investment advice. The money involved to seek counsel may currently be a put off for consumers, but robo-advice could help deliver this for those who are concerned about overspending.
It could also prove to be beneficial for those looking to invest a smaller sum. Recent research from Space, featured by Professional Adviser, found that people believe advice delivered in person would perhaps be appropriate if a large amount of money was inherited, but for amounts between £5,000 and £10,000 those asked said robo-advice could have a part to play.
So will robo-advice be as commonplace here as it is in the US in the future? The recent Financial Advice Market Review recommended making this more readily available as it does reduce advice costs for people who are less well off. There is an opportunity for advisers who do decide to incorporate more automated services into their offerings and it could be a good route in to investing for potential customers, who could then benefit from a fuller advice service in the future.
This article is featured in our latest Financial Services newsletter, which you can download here. It also takes a look at the industry-wide challenge of working effectively with vulnerable customers; we introduce Phil Brooks and our newly established experience lab; and take a look at millennials – debatably the most challenging group yet for the financial services industry.
To find out more about researching financial services such as robo-advice, call us at ORC International today.