Ben Goss, co-founder and chief executive of the risk profiling service provider, explained the decision to accelerate investment in this area was made before Christmas, backed by the findings of a client survey.
In December, the firm spoke to 72 respondents from 55 firms that use its Dynamic Planner software, finding while 61 per cent have no plans to implement ‘digital advice solutions’, 19.4 per cent said they were interested in robo-advice but not in the next 12 months.
A total of 18.1 per cent said they do want digital advice solutions and in the next 12 months.
The remainder already had digital advice solutions in place.
When asked what they felt the main benefits of providing online advice were, a third said providing cost effective advice to existing clients for more straightforward needs, such as Isas, while 21.6 per cent said attracting new clients and 18.6 per cent said supporting existing clients who are not currently being actively served
Distribution Technology’s new tools will range from financial planner-led through to customer self service, with the first of the former being ready to launch at the beginning of February.
Mr Goss said: “The road map is to deliver more solutions in that vein, as advisers want to control the brand and nature of that advice. We’re testing prototypes next week in order to refine that process.
“There is a huge opportunity for advisory firms to leverage their existing trusted client relationships, increasing access, lowering risk and cost,” he continued, adding that “attracting new clients is much harder”.
The research also found that regulation is seen as the greatest inhibitor to delivering a successful online advice service, while the willingness of customers to engage digitally is seen as the most significant blocker to take up.
Late last year the Treasury and Financial Conduct Authority teamed up to promise a ‘regulatory sandbox’ where firms could experiment with robo-advice models, free from potential penalties.
At that stage, Mr Goss stated that while it is not a ‘safe harbour’, firms will be able to get informal guidance and launch initiatives in a way which minimises the chances of retrospective actions and potential consumer detriment.
Last week, the head of the FCA’s Project Innovate, Bob Ferguson, said that the sandbox would be up and running by the Spring, also calling for more large firms to take advantage of the fintech assistance.
Already this year there has been much talk of the impending rise of so-called ‘robo-advice’, with acquisitive wealth manager Bellpenny becoming the latest firm to promise the launch of such a service.
So far, LV’s tie-up with Wealth Wizards to offer online retirement advice has been the most dramatic move forward, with the provider giving an update last week that it was in discussions with adviser firms and other insurers over sharing the automated system.
However, research from FinaMetrica suggested larger players should be weary of the reputational risks inherent in this fledgling market.
The firm’s director Paul Resnik previously remarked: “I think many of the big players in the UK will be wary of putting their names on these things, as the next market shock could reveal some robo recommendations that don’t meet regulatory standards around suitability.”
peter.walker@ft.com
