Why Should IFAs Embrace Rather than Fear the Rise of Robo-Advice?

Many advisers see robo-advice as a disruptive and potentially disintermediating threat. But robo-advice can instead enhance an IFA’s business model and improve client outcomes.

The answer is founded on the fact that robo-advice is a reality that is only going to get bigger and stronger which means that trying to turn back the tide King Canute style is not going to work. Far better to take advantage of this development as a revenue generating opportunity that can also improve client service.

For IFAs, the blending into their existing service mix a complimentary robo-advice type service can provide some very attractive benefits. It provides a viable solution, blessed by the regulators, for the ‘advice gap’ and so called ‘orphans’ who are not commercially viable as IFA clients in the traditional model.

Additionally a Robo-advice offering can offer a scalable entry point for clients many of whom will need face-to-face advice in the future on tax planning, pensions, mortgages etc thus allowing an IFA to compete with the banks in this space on a level playing-field.

The simplest and most cost effective route for an IFA to add a robo-advice string to their bow is to partner with a provider that can deliver a white-labelled full robo package that includes the technology and the underlying investment management prowess and track record. More on that in a future blog!

It’s worth pointing out that robo-advice is not necessarily just for those with a smaller nest egg. Many wealthy investors are keen to minimize the amount of fees that an investment portfolio costs per year as part of their approach to maximise overall returns achieved over time. These type of investors would typically be laser focused on maximizing the positive impact of the magic of compounding which they see as diluted by every pound that is extracted. An IFA offering a robo-advice proposition is able to provide a genuine solution for those looking for the most cost effective way to have their investments managed in a diversified portfolio by expert money managers.

Now is the time to embrace the emergence of robo-advice which gives the IFA a revenue generating USP to deliver to a wider target market a proven track record in delivering medium to long term top quality asset allocation with the aim of growing clients’ wealth over time.

Author: Simon Bottle

Simon Bottle consults on Marketing, Product Development, Sales, Client Services and Efficiency Re-engineering projects.