As current technology improves speed and convenience in so many aspects of our daily lives, services that still require an appointment and several days’ wait can seem like a huge source of frustration in contrast. Financial advice is one such example, but how far would you trust a computer algorithm to provide you with advice on how to invest your savings, if only for the sake of convenience?
Who uses robo-advice?
Robo-advice, considered to be a low-cost alternative to a face-to-face financial consultation, is aimed at those whose finances are generally less complex. However, recent research by Deloitte suggests that it’s the higher earners who are more likely to consider using robo-advice, along with those between the ages of 18 and 35, better known as the millennial generation – http://www.wealthadviser.co/2017/04/25/251015/robo-advice-appeals-higher-earners. Gavin Norwood, an insurance partner at Deloitte, pointed out that trust and financial understanding are still a barrier to people taking the plunge.
What does robo-advice mean for independent financial advisers?
While robo-adviser programs require you to enter your personal details, assets and income, they also need information such as your risk tolerance and financial goals to help them come up with some advice. But what if you’re not sure what your financial goals are? What if your plans are unrealistic? What if you’re not sure what your risk tolerance is?
Additionally, robo-advisers are limited in terms of the area in which they can provide advice, so while they can recommend investments, they may not be able to advise on debt management, for example. Robo-advisers don’t know if you’ve entered incorrect information, or whether your financial circumstances have changed. That’s where conversation with a professional still retains its value. Independent financial advisers won’t be out of a job yet, and nor will their supporting software providers, like https://www.intelliflo.com/, who provide back office systems for IFAs.
In fact, financial advisers, from large banks down to the small independents, are getting into robo-advice as a service that runs alongside and complements their existing advisory services. Robo-advisers attached to a well-known bank or company name could help build the trust in using them. While it’s difficult to say how sophisticated robo-advice will become in the future, one thing is for certain, with the millennials and subsequent generations having grown up in a digital age, demand for automatic financial advice is likely to increase.