Could robo-advice be the future of the profession?
Financial advisers are among the most likely professionals to be eradicated by technology or "robo-advice" — a prognosis that has drawn both disbelief and opportunism from the industry.
The forecast came courtesy of an Oxford University Oxford Martin Program paper, which said personal financial advisers had a 58 per cent probability of falling victim to computerisation and becoming totally automatable, "perhaps over the next decade or two".
Much of the reasoning related to the low cost and larger scale offered by "robo-advice".
The idea was condemned by Paramount Wealth Management principal Wayne Leggett, who said these projections once again reflect a misunderstanding of the true goals of financial advice.
"It goes back to being able to delineate between product sales and tailored financial advice," he said.
"You can have an advice program that can give an asset allocation, but it won't be able to properly assess the client's personal circumstances."
However, in other parts of the industry, the potential for a robo-advice future has been embraced.
Tim Bradbury, of ETF Portfolio Solutions, recently wrote about the opportunities the technology offers, particularly spreading financial advice to a wider cross-section of Australians.
"The common statistic within the advice industry is "only two in 10 Australians access the services of a financial adviser". Whether by choice or need, it is simply not realistic to expect the other 80 per cent to all seek comprehensive financial advice. So the potential marketplace to meet the needs of the 80 per cent is compelling in size and opportunity," he said.
He also said robo-advice could correct market inefficiencies.
Recently, The Fold Legal's managing director Claire Wivell Plater said regulators would have to reassess how to manage the entry of new financial technology companies in light of the emergence of robo-advice.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
