Fewer Advisors View Robos as a Threat
Traditional financial advisors are slowly embracing robo-advisors as potential partners rather than as a threat, according to a recent survey cited by the Financial Times.
Sixty-six percent of advisors are undecided about whether robos are a positive or negative force for their practice, according to a survey of 102 advisors by U.K.-based Panacea Adviser cited by FT Adviser. Just last year, when Panacea Adviser last conducted the survey, a whopping 89% of respondents said robo-advisors were a threat, according to the paper. The rate of incorporating robos into traditional advice practices is also picking up. While only 2% of advice firms surveyed this year currently offer a robo platform, 8% are in the process of integrating one and 12% are considering doing so, FT Adviser reports.
But robo-advisors may still fail unless the term “advice” is replaced with something closer to “guidance,” Derek Bradley, chief executive of Panacea Adviser told the paper. And in Britain, Bradley calls for financial regulators to step in prior to the launch of a robo to determine if the algorithms behind a robo do what they actually claim. He also wants the regulator to take responsibility from advisors if a robo-advisor’s underlying technology turns out to be wrong, the FT writes.
Adding digital tools to a traditional practice doesn’t always work out for all types of advisors, according to the paper. One executive at a U.K. independent financial advice firm tells the FT that because his practice works with a relatively small number of clients, the firm had trouble gaining enough scale to make an online investment platform work. Nonetheless the executive tells the paper that combining robo-advice with human advisors will result in the best outcome for clients while cutting the time advisors spend on administrative tasks.