Written by Jonathan Warren on Thursday 29 November 2018
As seen in Professional Adviser on 29/11/2018
If you’ve been reading up on the current state of play in the robo-advice industry, you’d be forgiven for believing that the market is unsustainable and unprofitable. But digital wealth managers’ low-cost, high-tech proposition caters for many customers, such as those who are unable to access more costly forms of financial advice – surely robo-advisers are in an enviable position? The recent losses reported by robo-advice firms are largely due to marketing spend, essential to build brand awareness, and high upfront and development costs. Coupled with this is the reluctance of baby boomers to change their habits and seek digital wealth managers; in response, firms are introducing a human element into their business models. So long as robo-advice providers can absorb losses in the short-term, they will be well-placed to cater to the millennial generations, which are set to account for 35% of the global workforce by 2020. The trick for these businesses is to stay in the game.