Robo-advice not moving advice forward
Robo-advice has not added anything to the financial planning process and will not be a useful substitute if it cannot meet the needs of clients in the same in the same way as face to face advice.
Capital Position chief executive Bernard Del Rey said robo-advice had provided no methodological improvement on how the financial services sector understands clients and is mainly focused on cost.
"Robo-advice removes the costs of advice and administration but has not replaced them with anything that builds out the advice relationship," Del Rey said.
"It has been able to do this because many advisers have not built robust solutions to deal with changing advice and client needs."
Del Rey said robo-advice has improved the customer experience in many cases but stated this tended to be in the self-directed investor space and has only opened another channel.
"There has been an improvement in the client experience alongside the drop in cost and as we saw in the first wave of online services in banking and broking it only creates another channel and not replaces advisory channels," Del Rey said.
According to Del Rey the next shake-up in financial services will be how firms spend to develop the client experience across these digital channels but warned that self- directed investors were usually transaction based relationship and did not carry high margins.
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