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Are robots the future of advice?

New research reveals more consumers trust robots to make their financial decisions, so will your next colleague be made of steel?

Tuesday, April 6th 2021, 6:00AM 4 Comments

by Daniel Smith

Garry Green

A new report from software firm Oracle reveals that consumers trust machines more than human advisers.

The majority of the 9,000 consumers surveyed globally said that they trust robots more than humans to help manage their personal finances.

Three quarters of consumers use robo-advice to help manage their finances – to free up time, reduce unnecessary spending and increase on-time payments. Robots are also helping many invest in the stock market.

Eighty-two per cent of respondents predicted that robots will replace financial advisers by 2026.

Garry Green, managing director at Quanton, believes that change is on the horizon but this may not be a bad thing for advisers.

“It’s not a case of getting rid of advisers and replacing them with robots, it is more that the market can grow and more people can be given advice and make better financial decisions because you are augmenting the advice process.”

Green says “More and more brokers are already using algorithms to help them in analysis, so it is becoming more mainstream and acceptable.”

As well as beginning to enter the mainstream, robo-advice also has the opportunity to “democratise financial advice”.

“In the past financial advice was only in the realms of the wealthy. But by using robo-advice and supplementary artificial intelligence it has actually opened up advice to more people. The market isn’t getting smaller it is actually getting bigger.

“The only constraint on growth is advisers. To give more people advice you need to make advisers more productive by allowing them to use robo-advice, then the [robo-adviser] can deal with a lot of the more mundane run of the mill advice. The more challenging advice can still be handled by the human adviser.”

For advisers to make the most of the incoming technology, Green says that they need to be thinking about the bigger picture.

“If advisers want to transition to servicing more clients going forward, they are going to want to look at ways in which they can bring robo-advice into their business. It gives advisers the opportunity to expand their businesses and to be more productive.”

Tags: roboadvice tech innovation technology

« [The Wrap] FSLAA isn't the only big change advisers need to be aware ofMann on a mission to diversify financial advice »

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Comments from our readers

On 6 April 2021 at 8:52 am dcwhyte said:
Of course Oracle would produce research supporting their products!! No surprise there. However, I doubt very much if serious clients will prefer to rely a series of algorithms exclusively. Smart advisers are already deploying robo-information (it's not robo-advice, in my view - it's an information source) so the human aspect will be ever present. Also, many firms have already latched on to the technology required to provide service to an extended client base.
On 6 April 2021 at 12:48 pm Pragmatic said:
What a load of tripe - produced by someone with something to gain.

The global experiment with RoboAdvice has demonstrated that the majority are simply marketing gateways into a supplier's product range. Any Robo technologies that claim to be independent, work on less than a 3% conversion rate, with the majority of consumers directed to humans along the way. In other words, these are high volume / low margin solutions that tend to appeal to those consumers who are reluctant to pay for bespoke advice.

The reality is that consumers will increasingly pay for a bespoke solution when it comes to their wealth management. Conversely this tends to be a low volume / high margin solution that is increasingly difficult to 'McDonalise'
On 6 April 2021 at 3:22 pm All hat no cattle said:
The majority of the 9,000 consumers surveyed globally said that they trust robots more than humans to help manage their personal finances.

Oh, really. I don't think they have thought it all the way through, let alone actually used these "robots". Because if they do, they must also trust the PEOPLE who program them!
On 7 April 2021 at 5:10 pm JPHale said:
Yeah/Nah another article talking financial advisers but really means to say financial planning...

The bespoke needs of a tricky lending deal or insurance client are not going to go away anytime soon.

There seems to be an expectation of a utopia of simplicity in the face of a more complex environment that is going to make robots a reality for all.

Nope, and I say this with a level of confidence having a significant educated involvement in technology...

People deal with people, and taking the people out of highly personalised situations completely misses the point

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