David Boyle
by Susan Edmunds
David Boyle
Analytics firm Cerulli Associates has released research that shows even the most automated roboadvice platforms offer clients the opportunity to receive personalised advice from a human representative.
Roboadvice is being discussed in New Zealand because the Financial Advisers Act review is looking to update the law to allow for it.
David Boyle, group manager of investor education at the Commission for Financial Capability and a member of the steering group for the FAA review, said roboadvice was a potential starting point for people who did not know how to engage with financial advice, and who were not ready for a personalised advice service from an adviser.
But he said it was only as good as the information a client submitted, and most people would reach a point where they needed the services of a financial adviser. "Roboadvice doesn't take into account people's feelings and emotions around risk," he said.
Boyle said it seemed likely roboadvice would become more common. "Depending on what happens in the review, roboadvice should be a great catalyst to grow and build the advice industry. Roboadvice is not taking advisers' business away... most advisers deal with those who have already accumulated wealth and want to know how to preserve it. Roboadvisers help people build up their wealth and invest. There will be greater demand for specialised advice when they need it."
Claire Matthews, of Massey University, said the research confirmed roboadvice would not replace human advisers.
She said it was just another option in the market. "Even if you are dealing with a person as your first port of call, underpinning everything they do is a lot of technology. Roboadvisers put the technology at the front and the person at the back. Different people like different models."
Her colleague, Michael Naylor, said clients who were likely to use roboadvice were not those who were highly sought-after by advisers.
"These clients would be too poor to be worthwhile. Hence it is good that they will now get a reasonably efficient generic service. The dangers are [that] the software will steadily improve so what advisers do will be slowly taken over [and] that clients will get used to a digital interface and will not switch to a human adviser once they have the money."
Cerulli associate director Tim O'Shea said: "Cerulli believes that digital advisers must incorporate some element of human interaction in their platform to increase client satisfaction."
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