Advisers have resigned themselves to embracing robo-advice despite the majority of firms having grave concerns about the regulatory threat it brings, according to a study from Prudential.
The study found that three out of four advisers worry robo-advice could mean a build up of future liabilities.
This is because advisers are concerned about whether customers will receive the right advice if there are not able to speak to an adviser at any point.
At a briefing with journalists this morning (1 November), Vince Smith-Hughes, director of specialist business support at Prudential, said: “Advisers are embracing technology but they are still wary of robo-advice, in terms of going from A-Z in terms of the actual advice process.”
The nationwide survey of 101 advisers found that 76 per cent are worried about possible long-term compliance and regulatory challenges while 67 per cent fear robo-advice solutions will not provide the best advice for clients.
The report from Prudential added: “There are also serious concerns that technology may not provide the best outcome for clients and an acknowledgement that the robo-route is potentially only suitable for clients with smaller funds.”
Despite the regulatory worries, more advisers are coming round to the idea of using a form of robo-advice in their business, to close the advice gap.
But more than two thirds, (69 per cent) of those surveyed now believe technological-based solutions can help close the advice gap.
This is a massive jump from a similar study last year which found that 17 per cent believed robo-advice would help.
Paul Harrison, head of Prudential’s business consultancy for advisers, said: “There’s a growing acceptance that robo-advice has a role to play but advisers have real concerns about the potential regulatory impact it will have.
“Many advisers remain sceptical about the risks and rewards of robo-advice, although improved technology can bring greater efficiency, reduce costs and help advisers to serve clients better while continuing to run viable businesses.
“However, views are changing rapidly as technology experts. Advisers will need to adapt to prove the ongoing value of bespoke advice and benefit from the opportunity technology offers.”
There is still a concern that robo-advice solutions are a threat to adviser businesses, as 40 per cent of advisers are worried about their firms losing out to technological-based solutions.
When it comes to launching their own versions of robo-advice over the coming year, 41 per cent of advisers said they or their firm had plans to offer robo-advice solutions alongside traditional services.
Nearly half (46 per cent) said offering robo-advice will help their business grow by enabling them to help clients will smaller funds. Just over a quarter (25 per cent) disagree.
