Speaking at the Engage Insight robo-advice symposium yesterday afternoon (5 November), Jason Whyte said that he who owns the client relationship dictates where the value goes.
Mr Whyte said: “While the likes of Hargreaves Lansdown, St James’s Place and Succession have different models, vertical integration has huge potential to be the dominant structure.
“Anyone not involved will be reduced to effectively farming their back book,” he commented.
Mr Whyte also ran through the UK’s emerging automated advice market in the context of the US and Australia.
He said: “The UK is actually not behind in this space. The tech plays are just as advanced as in other countries, but the penetration has not been that great so far.”
He added for providers and wealth managers, the real danger is around customer base control, with a real risk of being cut out of the market and losing a grip on the next generation of investors.
Mark Loosmore, executive manager for wealth at technology supplier Iress, told delegates at the event that from experience with advisory firm clients, having robust and repeatable processes makes it much easier to defend the way things are done if the regulator comes calling.
The first crucial aspect of this is starting with quality client data, a lack of which had been behind the failings of many firms moving into the digital age.
“Raw data can be turned into useful information by digitising it, rather than just scanning fact finds and filing them away. Advisers can initiate proactive client contact when things change, for instance,” explained Mr Loosmore.
He also mentioned the increasing pervasiveness of social media in the industry, adding that there’s more work to be done in actually communicating with consumers, rather than one another in the sector.
“Interestingly, the statistics show that social media engagement isn’t that much different from those aged 20 to 30 and those in their 50s and 60s, it’s much more about income; the more affluent, the more engaged.”
Earlier this week, sister magazine Money Management reported Nick Hungerford, chief executive of Nutmeg, stating robo-advice platforms in the UK would not replacing traditional financial advisers yet.
His comments come less than a month after he was named as one of the FCA’s expert panel for the Financial Advice Market Review, which has put robo-advice firmly on the menu of options being considered to plug the advice gap.
In the cover story of Money Management’s November issue, Mr Hungerford said online companies in the UK were so far only doing the investment management. “We are not yet doing the advice side. Obviously we have applied for a licence at Nutmeg but that hasn’t yet been granted so it will help when that happens,” he added.
Mr Hungerford claims that, once granted permission, Nutmeg should be the first to offer online advice in the UK.
