The robo-advice revolution
Are real advisers being left behind in the robo-advice revolution? If you’re an adviser and you don’t know what robo-advice is yet, keep reading because sooner or later it’s almost certainly going to affect your business.

So what exactly is robo-advice? It’s an attempt to automate the advice process, when it all began it really had nothing to do with advice at all, it was mainly SIPP and ISA companies setting up web based direct to customer offerings. They targeted the DIY investor who wanted to cut out the middle man (the IFA) and set up their own products directly image of an old tin robot with the provider. That model has now developed in to the realms of advice and many more providers have entered the market with their own web propositions.

In the not too distant past most clients had to book a meeting with their adviser just to get access to the best financial products. Now, they can sit down with a glass of wine, in the comfort of their homes, risk profile themselves, let an algorithm pick their investments in accordance with their risk profile, then set up their own SIPP or ISA with just a few taps on their smart phone. We’ve seen the automated trend slowly move in to all aspects of financial services and the relaxation of the pension rules has prompted a provider gold rush towards new at-retirement models.

The big providers are all over this revolution, they’re taking advantage of web technology and investing big money in their own automated services. The official line is that their shiny new web propositions are only there to complement their existing IFA suppliers, however, make no mistake, the providers are going directly after your clients!

The majority of IFA practices have a broad client base, clients with smaller funds make up the bread and butter of adviser client banks and without them many firms simply would not survive. Providers are making a valiant attempt at skimming off those bread and butter clients with their direct to client offerings, their theory being that since RDR, firms can no longer afford to service clients with smaller funds either because the clients can’t afford to pay for the advice or it’s too expensive for a traditional IFA to deliver.

In my opinion IFAs need to fight back with their own web propositions, firms can themselves harness the power of the internet to make their own advice processes more efficient and appealing to today’s web savvy clients and tomorrows millennials. With smart online automation advisers can cut the amount of time that they spend working on cases to ensure that, regardless of the size of the client's pot, the client remains profitable and more importantly they receive good adviser backed advice. I think there is a real danger that providers are trying to cut out human advisers completely and replace them with a 15 page disclaimer! Replacing IFAs with algorithms cannot be good for clients and it will surely lead to poor outcomes with no redress available to clients.

Robo-advice is definitely here to stay, some of the early systems are already moving on to their second and third generations, rest assured, it won’t be long until they start targeting your high net worth clients too!

Santchi is working on a range of automated solutions to suit IFA websites, we would love to speak to any firms interested in developing their own web propositions.


Santchi are a web development company based on the Wirral in the North West of England. We develop websites and web tools for the financial services industry. We specialise in websites for financial advisers and financial services professionals.
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