Older investors to lead take-up of robo-advice
Robo-advice will expand rapidly into the self-managed superannuation sector with self-directed sophisticated investors over age 60 becoming one of the fastest growing groups of users of robo-advice according to a new report released by financial services consultancy FinDigital and robo-advice provider Ignition Wealth.
The report — titled The 2015 Automated Investment Advisers Global Market Review — stated that robo-advice was being targeted at investors who do not seek advice and those aged 60 and over were attracted by the levels of transparency and control as well as the lower fees and better customer experience than traditional advice models.
FinDigital managing director, Ian Dunbar, stated that while robo-advice was taking market share from established providers its main target was investors who did not seek advice, including self-managed super fund members as well as younger investors who were more familiar with technology and typically had investments of up to $80,000 to invest.
Dunbar said robo-advice was likely to take off in Australia as it has done in the United States and Canada as there were a large number of people in the local market who did not seek financial advice. However it would not be a threat to financial planners who had existing high-touch relationships and should be considered as a way to reach new unadvised clients.
He said the report found instance of advice business white-labelling robo-advice tools and systems and using them to recruit lower net worth clients and offer low cost scaled advice
"There's an opportunity for financial advisers to capitalise on the robo advice trend by white labelling an existing solution and offering it to customers who aren't ready to engage a planner but who want some limited investment advice," Dunbar said.
"The adviser can be alerted once a client's portfolio reaches a certain size and they may need more comprehensive financial advice. It's one way to provide a low cost, scaled advice solution to more investors."
Ignition Wealth chief executive, Mark Fordree, stated that robo-advice should be regarded as the adoption of digital innovation and technology into the advice industry which is being disrupted by digital trends in the same way the media and travel industries have been.
AUTHOR
Jason Spits
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