Advisers could find their business eroded by the rise of direct to consumer (D2C) platforms unless they can prove the added value of a long-term relationship with clients, research from Cerulli has suggested.
According to the Boston-headquartered research firm, D2C and D2C platform distribution is on the rise in the UK, and a move to automated advisory models could eat into traditional advice businesses unless advisers focused on delivering bespoke, relational advice.
The European Distribution Dynamics 2015: Preparing for a New Era report from Cerulli found that 82 per cent of asset managers believes the D2C marketshare and D2C platform distribution would grow over the next five years.
In the report, Barbara Wall, Cerulli’s Europe research director, warned: “There is a global trend toward robo-advice that should not go unnoticed. It started in the US and is spreading in Europe, Nutmeg in the UK and MoneyFarm in Italy.”
Last week, Vanguard announced that its Personal Advisor Services, which combines aspects of web-based advice and investment-modeling algorithms with traditional human contact, is ready to be rolled out to clients this spring in the US.
Jeremy Phelps, financial planner at Llanelli-based Financial Solutions Wales, said: “For those who understand asset allocation and the level of risk then it may be comfortable to use D2C propositions. Many will use funds based on past performance, but could be a single-asset class.
“Will DIY clients really understand assets held within a fund and the importance of asset allocation and divsersifying? The internet has revolutionalised the world so D2C propositions will have a place in the future but most people want personal advice about the money they are investing.”