There are over 12 times more people per financial adviser who could benefit from financial advice today than 25 years ago. There are only 24,000 financial advisers compared to the 220,000 in 1990. This is the crux of the so-called advice gap, which effectively means people are unlikely to make decent financial plans, make regular savings contributions, or bother with valuable financial protection. Equally, the government, having announced pension freedom (and then backtracking somewhat), doesn’t want lots of people using their new found freedom to make errors of judgment or mistakes.
What has crept into the market on the back of the smartphone technology boom is the idea of robots giving advice rather than humans. The so-called robo-advice business is a very real alternative to existing business models.
Robo-advice is described by the website, Investopedia, as:
“A robo-adviser is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robo-advisors (or robo-advisers) use the same software as traditional advisors, but usually only offer portfolio management and do not get involved in more personal aspects of wealth management, such as taxes and retirement or estate planning.”
In other words, this is a restricted algorithm model that provides a limited solution to a limited problem by use of technology and is in no way personal. While robo-advice might have some place in the industry it will fail as a valid advice concept because it cannot replace the human subtlety needed to adjust recommendations according to both hard facts and soft facts – emotions. Emotions are the biggest single factor for any of us doing anything.
Robo-advice is a real threat, not to the extent of replacing financial advisers, but to ensure today’s new financial advisers make the right changes to survive and survive well. Robo-advice is an optional barrier. You either ignore it or accept it and hence make plans to beat it.
To stay ahead of such optional barriers, today’s financial advisers will need to embrace the magic of modern technology and educate their clients with a better way of interacting with them through that technology, before the robot does!
Truly Independent is a National financial advice firm that truly does stay ahead of the curve when it comes to technology. Our back-office system is a powerful and comprehensive tool that runs everything automatically. It is a single data entry and completely paperless. Any of our IFAs in the UK can use it with a simple login. On top of this VERO is our fully integrated investment platform that targets growth whilst streamlining the investment process. Built by custodians, True Potential, our Wealth Platform is engineered with the future in mind, delivering innovation, choice, control and value. If you are a financial adviser and wish to join an ambitious company with a long term future in mind then book your discovery session today by clicking here, and begin your journey to becoming a Truly Independent financial adviser.
