Advisers with robo capabilities will have an edge
While standalone robo-advice won’t attract affluent investors, it will offer a competitive advantage to traditional wealth managers over competitors, GlobalData says.
The research company said that robo-advisers alone didn’t attract assets under management, and that high net worth (HNW) investors generally only entrusted small portfolios to digital-only platforms.
GlobalData’s Technology in Wealth Management: Drivers for Adoption and Future Trends survey found that demand for robo-advice was growing, however, meaning that offering it could strengthen human advisers’ value to clients.
Forty per cent of private wealth managers surveyed noted strong demand for the technology from clients, most obviously in the Asia-Pacific region.
“Despite some drawbacks robo-advice is a competitive advantage that all traditional wealth managers must acquire,” GlobalData financial services analyst, Andrew Haslip, said.
“They are not about to lose their best HNW clients to a start-up robo-advisor, no matter how slick the digital interface. But they might just lose out to a competitor that has adopted the technology and integrated it into its overall private wealth management proposition.
“Although ultimately the human element will remain prominent in the world of financial advice, the industry will continue its technological advancement.”
GlobalData’s finding follows the closure of yet another solely robo-advice firm in America, Hedgeable, which proceeded three similar firms already calling it quits.
AUTHOR
Hannah Wootton
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
