Robo Advice – Friend or Foe?

Our latest poll stems from a recent finding that two in three Australian consumers are open to using a digital advice tool to ‘plug advice gaps’ (see: Affordability Remains Main Barrier…).

That same finding, however, also qualifies that most Australians would prefer to utilise any digital or robo advice in conjunction with some form of human interaction.

To a large extent, this conversation – and your vote in this poll – comes down to how you add value for your clients. If the value you deliver is more of a transactional or a facilitating nature, perhaps digital/robo advice services may present a more efficient and lower-priced alternative for your clients and prospective clients.

Back in 2014, benchmark consulting firm, Business Health, identified that at least some elements of robo advice services could indeed pose a threat to human advisers (see: Five Tips to Counter the Virtual Adviser). In one of its newsletters we reported at the time, the firm noted that advisers couldn’t ignore one particular robo advice service it said was pitched directly at the staples of what most advisers have traditionally done.

The next step in this conversation is identifying the ‘value’ typically delivered by robo or digital advice services and establishing how human advisers differentiate themselves from these services. Business Health reported robo advice services offer:

• Initial marketing
• DIY calculators
• Risk profiling
• Fully compliant SoA/plan preparation
• Implementation of the recommendations
• Ongoing monitoring

The firm’s recommendation to advisers to counter any potential competition or value over-lap from robo advice included:

• Don’t compete on price, but rather the value you deliver
• Communicate proactively, meaningfully, frequently and personally
• Review your Client Value Proposition in the light of the ‘new world’
• Continually reinforce your CVP with clients, staff and centres of influence – be able to confidently and clearly articulate why spending more with you represents far greater value
• Ensure you’re taking full advantage of the opportunities technology offers

While this debate commenced years ago, do the findings in the Investment Trends 2022 Financial Advice Report give you pause to reflect on how you add value to your clients today? And will this change in the future, given the continuing emergence – and seeming acceptance – of digital advice services? Will you embrace digital advice offers in future as a way to complement the value that you provide? Or do you see such services as more of a threat than a support?

Tell us what you think and we’ll continue the conversation next week…