Friend or foe? Threat or ally? What will so-called robo-advisers do for the future of the advisory market?
Robo-advice. Never have two small words grabbed so much attention in our industry in such a short space of time. Government, regulator, providers, advisers, fintech disruptors, media commentators, even some consumers have an opinion about the rise of the robots.
Robo-advisers have been making headlines for several years now in the US, not least due to the millions of dollars of venture capital investment being poured into the sector. Today, there are over 200 robo-advice propositions in the US, often founded by young, tech-savvy entrepreneurs out of Silicon Valley. But it has been the arrival of automated investment propositions from major brands such as Vanguard, Charles Schwab, and Fidelity which has validated the robo-model as a legitimate alternative to the traditional face- to-face channel. With trusted brands and deep marketing pockets, these robo-providers are acquiring multi-billion dollars’ worth of assets; for example, Vanguard’s Personal Advisor Services has reportedly grown to $31bn AUM (as at January, 2016) since launch in May 2015.
What really is robo-advice?
On this side of the Atlantic, things are a little more complicated. If you believe what you’ve read in the press over the past year you could be forgiven for thinking robo-advice applies to almost any remotely digital financial services proposition, regardless of whether any advice is actually part of the service.