Robo-adviceSep 27 2016

Ex-Aviva sales director on robo-advice threat

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Ex-Aviva sales director on robo-advice threat

Robo-advisers "are threatening" to bridge the advice gap created by advisers chasing just high-net worth investors, according to Mark Broadhurst, who was a senior executive at Aviva for 20 years.

Mr Broadhurst, who is now head of EMEA for intellectSEEC, a US-based provider of distribution solutions for life and pensions companies and advisers struggling with regulatory change and legacy systems, said the advice gap has continued to grow since the Retail Distribution Review.

Manufacturers in the industry, namely the insurers, have predominantly focused their attentions on the high volume intermediated market, Mr Broadhurst said.

This flight to quality has left a growing number of customers dis-intermediated, and the technical emergence of 'Robo Advice' solutions are threatening to bridge the gap.Mark Broadhurst

He said: "Not only did insurance companies have to contend with the RDR, they faced a new challenge in the shape of fund supermarkets and wrap investment platforms.

"Historically insurance companies controlled volume through product and commission enhancements, and provided a packaged solution, which included a product tax wrapper, administration service and fund management capability.

"Platforms transformed this space and provided a more holistic unfettered capability for wealth management, and insurers found themselves becoming fund providers alone.

"This flight to quality has left a growing number of customers dis-intermediated, and the technical emergence of 'robo-advice' solutions are threatening to bridge the gap."

He added if the turbulence was not enough, the industry now faces a new distribution threat in the shape of technology providers.

Mr Broadhurst, who was European sales director of Aviva, said: "One thing the industry has been good at is learning from their mistakes, and there is clear evidence that the market is looking closely at all the threats.

"Providers are looking closely at their social and economic responsibilities in respect of the savings and advice gap, whilst trying to balance the risk of new technology entrants, and creating more sustainable and profitable business models for the future."

Justin King, Chartered wealth manager and Chartered financial planner at MFP Wealth Management, said: "I think robo-advice is an opportunity and not a threat.

"I think it could allow an increase in face-to-face advice to flourish and customers gain on going access to their investments and savings in an accessible manner."