As BlackRock becomes the latest provider to buy a robo-adviser, the Association of Professional Advisers admits robo-advice is more suited to investment advice and that it is harder to do broader holistic financial planning with robo-advice.
Chris Hannant, director general of the Association of Professional Advisers, told FTAdviser that robo-advice is most suited to narrow investment advice because it is easier to program a computer to design an asset allocation when it is given a risk profile.
He said: “It is harder to do the broader holistic financial planning, that is more of an art than a science because it involves trying to understand peoples’ aspirations, goals and hopes.
“Most people struggle to articulate that themselves and the skill of an adviser is drawing that out.”
Richard Howells, intermediary sales director at Zurich, added “Robo-advice is not the answer, it is one of the answers. Everyone has to realise the customer will choose how they want to engage with this market.”
Mr Howells and Mr Hannant’s comments come as BlackRock entered into a definitive agreement to acquire San Francisco-based robo-adviser firm FutureAdvisor.
FutureAdvisor will operate as a business within BlackRock Solutions, and the unit will provide financial institutions with technology-enabled capabilities to improve their clients’ investment experience.
Tom Fortin, head of retail technology for BlackRock said: “As demand for digital wealth management grows, we believe that our combined offering will accelerate our partner firms’ abilities to serve the mass affluent in a convenient, scalable way.”
BlackRock’s deal comes after earlier this month, LV took a majority stake in the UK-based automated advice firm Wealth Wizards, increasing its capital to allow the development of its white-label algorithm based platform.
