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One in 10 advisers look to go robo

One in 10 advisers look to go robo

A total of 13 per cent of financial advisers are looking at robo-advice in detail to provide a cost effective solution for smaller clients, according to research from consultancy Harrison Spence.

The firm’s IFA View survey was completed by around 150 respondents in November and December 2015.

It found that 27 per cent regard robo-advice as potentially interesting, although not something they have yet explored in detail.

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More than half - 53 per cent - describe themselves as traditional when asked about their business model, and are still struggling with the time and effort required in transitioning to a fee-based model, three years after the Retail Distribution Review.

The survey also found 10 per cent describe themselves as ‘21st Century’, with a focus on using technology, while 24 per cent said they are targeting higher value clients to offset the increased costs associated with regulation.

However, Harrison Spence’s research also found that 48 per cent continue to target the same clients in the same way despite the challenges and increased costs.

Only 6 per cent see a significant proportion of business coming through social media, but 31 per cent said they get the occasional lead this way and 34 per cent are actively looking at ways it might support their business; with one in three dismissing it as irrelevant.

Brian Spence, managing partner at Harrison Spence, said: “We are now seeing a real pragmatism take hold as business-owners contemplate the work required to create a truly 21st century practice.

“For many, the further struggle to create the kind of financial planning-focused business clients will increasingly demand is starting to look unrealistic – half believe they will sell their business within five years and 16 per cent during 2016.

“The business of advising clients continues to be a pleasure for the majority (46 per cent are very satisfied and a further 48 per cent moderately so), yet weighed in the balance against the pains of wholesale business transformation, this just isn’t enough.”

Nick Hungerford, chief executive at Nutmeg, said it is great that 13 per cent of IFAs are looking at robo-advice as a way to fill the advice gap, though a little worrying that only one in 10 describe their business models as ‘21st century’.

“More seriously, it is genuinely worrying that among the adviser community, so few are interested in filling the gap and serving those with lower incomes and asset levels.

“The fact that a quarter of IFAs are targeting higher value clients to offset regulatory costs is startling, and we must dig deeper to understand whether with lower regulatory barriers they would open up to a wider customer base.

“Hopefully the Financial Advice Market Review will result in changes that make this option possible.”

To learn more about robo-advice and to earn CPD read FTAdviser’s Guide to Robo-advice.