Fund management giant BlackRock has said it sees its investment in robo-advice as part of a business-to-business strategy rather than an attempt to go direct-to-consumer.
Michael Gruener, managing director of Emea retail at BlackRock, said the company would use its stake in robo-advice firms to provide technology to existing advisers, allowing them to offer robo-advice.
Earlier this year BlackRock took a large minority stake in robo-adviser Scalable Capital which launched in the UK last summer and describes itself as "Europe's fastest growing digital wealth manager".
Before this, in 2015, BlackRock bought San Francisco-based robo-advice firm FutureAdvisor, which now operates as a business within BlackRock Solutions.
Mr Gruener said: "We believe that the robo-advice space ultimately is going to be a B2B business. The vision for us is technology enabling an existing intermediary. That’s what the winning business model is."
He said BlackRock's view was that ultimately the "end game" for robo-advice would be advisers buying solutions from technology providers.
Mr Gruener said there would ultimately end up being "three to four, maximum five" robo-advisers who would end up being successful.
These would be the players that are able to link up to every part of an individual's financial situation, across mortgages, bank accounts and investments.
He added: "The next thing which is going to come to digital advice is data aggregation across different pots of money. You cannot expect your clients to have all their money in one place.
"They will have everything there, everything transparent. This digital advice will be better than physical advice because it is advice on your total pool of money as opposed to just that piece which is at that particular intermediary.
"That’s where we see the end game. And then may in two or three years’ time there will be artificial intelligence."
Mr Gruener said the big question for the UK robo-advice industry would be whether the big six banks would be able to get into this space fast enough because of the huge first-mover advantage.
He said: "These six names have access to 90 per cent of the UK population. Once those six have decided on their digital strategy the UK is basically done."
Mr Gruener also expressed scepticism about whether big consumer names would get into this space because of the onerous regulations.
Tencent in China is often given as an example of a social media company moving into fintech since it launched its payment service on WeChat, but Mr Gruener pointed out that China's financial services sector is that the distribution is not as highly regulated in China.
damian.fantato@ft.com
