Robo-advice impact evident but is it all positive?
An overwhelming majority of investment professionals around the world believe automated financial advice tools, or robo-advice will have a positive effect on advice costs, while 70 per cent of respondents said mass affluent investors will enjoy lower costs, improved access to advice and enhanced product choices.
The CFA Institute Fintech Survey Report 2016 showed robo-advice was considered to be the technology that would have the greatest impact on the financial services industry both one year and five years from now, with 40 per cent believing robo-advisers will have the greatest impact on the industry, with blockchain technology coming in at second place.
However, the majority of respondents (70 per cent) believed automated financial tools could not replace engagement with human advisers among ultra-high net worth investors, with 67 per cent believing the same for institutional investors.
This illustrated the fact that automated financial tools could not provide the tailored financial advice required by this market segment, which had large, diverse portfolios and complex investment needs, the CFA Institute said.
CFA Society Sydney president, Anthony Serhan, said that while technological innovation would definitely disrupt the asset management industry, the jury was still out on whether it would be "unambiguously better off".
Respondents were divided on other impacts of robo-advice, with only 37 per cent believing it would have a positive impact on market fraud/mis-selling, while only 37 per cent believe it will improve quality of service.
However, 72 per cent of respondents from the Asia-Pacific region believed it would have a positive impact on product choice, compared to the Americas where only 42 per cent thought product choice would increase.
The asset management sector will bear the brunt of robo-advice, according to 54 per cent of respondents, but eight per cent ticked ‘other', with financial advisers and wealth management noted as specific groups that would be affected.
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