A poll carried out at the recent Intelliflo Change the Game conferences held in Manchester and London indicated robo-advice is regarded as less of a threat to business for advisers than it has been in recent years but large product providers going direct to clients remains a top concern.
Advisers at Intelliflo's events were asked what the biggest threat to their business is today, and the top two answers that consistently featured were ‘robo-advice and direct investment platforms’ as well as ‘large product providers going direct to clients’.
Last year, both options gained equal top share in the poll with 37 per cent of 315 respondents claiming these were major concerns.
However, this year, robo-advice dropped to 25.5 per cent of 419 respondents, with ‘large product providers going direct’ falling down slightly at 32.5 per cent.
The events, held in June 2018, were attended by a record 809 financial advisers, paraplanners and product providers.
Nick Eatock, Intelliflo's executive chairman, said: “It’s interesting to see that robo-advice is becoming less of a concern for advisers.
"I think many are realising that they can actually harness the technology to develop their own form of robo-advice, that sits alongside and compliments their broader financial advice expertise.
"There remains a scepticism about what the large product providers might do in terms of going direct to clients though and only time will tell if that is something that is justified or not.”
Last year, pension provider Aegon came under fire for allegedly poaching clients from advisers via an automatic upgrade process.
The firm was accused of writing to clients to inform them their account is going to be "upgraded" if their adviser has not contacted them within a 12-month period – without notifying the intermediary of its plans.
If customers did not reply stating they do not wish to be upgraded, their policies were automatically moved onto Aegon’s direct to consumer Retiready platform.
The softening attitude toward robo-advice comes after advisers were warned they are putting their businesses at risk if they do not invest in fending off robo-advisers.
Earlier this year, Lester Petch, the chief executive of Tam Asset Management, which offers a white labelled discretionary fund management solution to advisers, said robo-advisers were gradually moving closer to emulating the service advisers offer.
But unlike financial advisers, most robo-advisers only offer risk-rated portfolios of investments, usually passive ones.
That explains why Schroders-backed Nutmeg is currently looking at introducing human advisers into its service, while rival Scalable Capital, in which Blackrock has a large minority stake, has recently done just that.
IFA Kusal Ariyawansa agreed that robo-advice does not present a real threat to advisers.
The financial planner from Appleton Gerrard said: “Robo-advice is not a threat for larger portfolios as there is neither advice nor purpose. New entrants naturally might be tempted by its simplicity, yet when they accumulate meaningful sums, face-to-face advice is naturally sought. I've lost count on the number of stock portfolios I've analysed over the years which have failed to achieve efficiency.
"Most realise that it is better to delegate such complexities to a professional. Some do it sooner whilst others leave it until they realise the significance of the money.”
aamina.zafar@ft.com
