An adviser needs to know their client, products and the law before giving advice. In theory a Robot can do all of this, much of it more efficiently and all of it cheaper.
Theory is becoming reality. Finchat has a voice based financial health check. Quotacy has a voiced-based Life Insurance quotation system and investment Robo advisers like Stockspot are common place. Put them all together and you have the makings of a Robo adviser.
This is easier said than done and ASIC have closed down a couple of early Robo advisers for not being up to the job. ASIC still hopes digital advice will make advice more affordable and accessible. A compliant Robo adviser is probably not far away.
How will advisers react to a Robo adviser charging a fraction of their fee?
Some will see another nail in the coffin of an industry labouring under increased compliance demands, loss of commission revenue and high education requirements. Others will see opportunity.
Robo advice can service clients who prefer digital advice or cannot afford face-to-face advice. This could be a substantial group – Adviser Ratings found only 12.2 % of the population used an adviser in 2019 so 88% need advice. Robots can also onboard clients, do health checks, provide quotes and schedule meetings.
If you can’t beat them, join them.