Robo-advisers have brand handicap

1 December 2016

The lack of recognised robo-adviser brands remain a primary handicap despite opportunities with high net worth (HNW) individuals, according to Verdict Financial.

According to a Verdict report, 52 per cent of millionaires' investable assets are managed on a discretionary mandate basis globally but the level of interest varies significantly between markets.

Verdict found that discretionary portfolio managers would experience competition from digital providers which had traditionally been conceived as appealing mostly to self-directed investors.

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Verdict acting head of wealth management, Bartosz Golba, said: "Wealth managers in developed markets have started to lean towards the view that digital players no longer compete only for execution-only business".

"Indeed, in Europe many providers dubbed ‘robo-advisers' offer a discretionary investment management service. They have clear fee structures which appeal to price-sensitive clients, though the lack of a recognised brand remains their primary handicap," he said.

The report found HNW individuals in Singapore, the UK, and the US had an average of over 70 per cent of their portfolios placed in discretionary mandates, and that developed markets generally had a higher uptake of discretionary asset management than emerging economies.

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How can a robo adviser offer a discretionary service? ASIC is bloody gutless in this area at the moment! People program the advice into the system , but they dont have AR status so if the advice is crap they are untouchable. Does anyone else see this? Robo advice is the biggest way to get out of compliance since not making file notes and losing client files! If I open up a Robo Advice provider, I have no PI issues, no compliance issues, I may give exactly the same advice as before but since I am no longer a AR, I am not responsible for the silly little robots mistakes! Stuff me its still investors money that will be lost!

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