Robo-advice keeps wealth managers awake at night

THE MAJORITY of asset and wealth managers (AWMs) fear losing part of their business to fintech companies, with automated ‘robo-advice’ a particular worry, according to a new report.

60 per cent of AWMs surveyed by accountancy firm PwC for its Global Fintech Survey 2016 were concerned about being left behind the technology wave, yet 34 per cent admitted to having no contact with fintech firms at all.

“Roboadvisors” have been disparaged as less valuable than human professional wealth advisors, and so far have been focusing mainly on low balance accounts,” said the report. “But the innovations under the umbrella of “robo-advisors” are becoming more sophisticated and, thus, enable advisors to service higher net worth accounts.

“In fact, “robo-advisors” create an opportunity for asset managers to target the mass affluent who are looking for cheaper alternatives to receive advice on how to manage their assets.”

The PwC research also said that innovative business models, such as marketplaces and investor networks, are changing the way investments are made.

“Communities of investors are emerging as new social networks,” said the study.

“They provide user-generated financial content and tend to improve interactions and facilitate investment decisions.

“These innovative business models aim to create value through connections among a variety of a platform’s users: investors, financial advisors and asset managers.”