Ageing IFA market opens doors for robo-advice
Robo-advisers need to capitalise on the ageing independent financial adviser (IFA) workforce and new technology and capital being introduced, as inflows for robo-advisers show a decline.
That was according to financial services research and insights firm, Verdict Financial, which said the ageing, predominantly Baby Boomer adviser base in countries like Australia, Canada and the UK and the US could look to robo-advisers as an exit strategy, who will be seeking new clients to grow their business.
Verdict Financial's head of content for Asia-Pacific, Andrew Haslip, said that robo-advisers, whose appeal lied in low fees through mainly exchange-traded fund (ETF)-based portfolio offerings, were only breaking even despite acquiring pools of client assets well above industry averages.
Companies such as Betterment and Wealthfront would also struggle to thrive this year, he said.
"Inflows to robo-advisers, while positive, have slowed and smaller robo-advisors or those in smaller markets such as Australia will remain well below the necessary volume based on current trends," Haslip said.
"For robo-advisers looking to scale up their client assets quickly, the wave of retiring advisers, along with the current low cost of capital, offers a once-in-a-lifetime opportunity, provided they pay for it."
Established robo-advisers could utilise this market to attain the capital necessary to buy the client books of retiring financial advisers and tap into the older, high net worth client base that may never have considered a robo-adviser.
"The clients will benefit from cheaper ETF-based portfolios while robo-advisers boost their client assets. So keep your eye out for the wealth industry's newest trend, the robo-consolidator," Haslip said.
AUTHOR
Malavika Santhebennur
Recommended for you
AMP has agreed in principle to settle an advice and insurance class action that commenced in 2020 related to historic commission payment activity.
Financial advisers will have to pay around $10.4 million of the impending $47.3 million CSLR special levy but Treasury has expanded the remit to also include super fund trustees and other retail-facing sub-sectors.
While social media can have positive financial influence, the overwhelming risks signal a greater need for affordable advice as Australians continue to seek financial education on social media.
Fitzpatricks Advice Partners has released a guide on building a national advice firm with the argument that these firms are crucial to facilitating growth in the struggling profession.
