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How big is the robo threat to wealth firms?

Four wealth managers discuss their views on the rise of robo-advice in the UK.

Robo wars

The face of UK wealth management is changing quite dramatically as digital providers line up wealth propositions.

While businesses based in Belgium, Germany and Italy are looking to launch so-called robo-advisors into the UK, leading High Street banks are looking at ways to exploit growth opportunities in this areas. Additionally, traditional wealth firm such as Charles Stanley are also exploring their options.

Four wealth managers discuss how they view the robo-advice threat.

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Robo wars

The face of UK wealth management is changing quite dramatically as digital providers line up wealth propositions.

While businesses based in Belgium, Germany and Italy are looking to launch so-called robo-advisors into the UK, leading High Street banks are looking at ways to exploit growth opportunities in this areas. Additionally, traditional wealth firm such as Charles Stanley are also exploring their options.

Four wealth managers discuss how they view the robo-advice threat.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Jonathan Baker, Branch manager, Charles Stanley, Leeds

‘Looking at results for the likes of Hargreaves Lansdown and other digital players, it is clear that the biggest shift in client behaviour is towards digital interaction. We see it ourselves at Charles Stanley through our own digital offering, Charles Stanley Direct, where the weekly take-on of new clients is astonishing in relation to the advised business.

‘We are watching this space cautiously. All our current user behaviour analysis doesn’t point towards mass acceptance and the industry is still grappling with terminology – is it robo “advice”, robo “suitability” or something else? And does the man on the street trust a robot with his hard-earned money?

‘In Q1 we will be launching some pilot robo-lite modules linking through to the foundation portfolios on Charles Stanley Direct to gauge a response from our considerable audience. Management will be looking at the results keenly and we believe robo is relatively simple to deliver technically. Regulation will be a higher hurdle and we await any forthcoming decisions in this area.’

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Kevin Doran CIO, Brown Shipley, Manchester

‘The advent of ‘robo-advice’ ought not to be a development that strikes fear into the heart of businesses such as ourselves.

‘In many cases, the provision of such robo-advice has been designed to offer a solution for clients with more basic requirements, or for where the speed and cost of providing the in-depth and thorough review of a client’s finances is unwarranted, given the levels of funds involved.

‘Over time, as the levels of artificial intelligence increases, more complex cases may well be able to be handled by the robo-adviser.

‘However, since the impact of regulatory requirements will remain in place and the developers of such software will seek to ensure their part in the value chain is rewarded, we see the increased use of these services as a mechanism that will help define various market groups.’

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Matthew Brown, Private client partner, Thomas Miller Investment, London

‘The simple answer is a resounding no. Regulation and a drive for higher standards have shrunk the advice community to a size where they only cater for clients of a certain level of wealth and complexity. There is a distinct advice gap for the mass affluent that needs to accumulate invested savings to fund, at the very least, their retirement aspirations. This group is used to interacting digitally – why should their wealth management be any different? As a profession we should welcome this innovation.

‘However, with a certain level of wealth or when complex decisions are needed, no digital solution comes close to replicating a professional, expert opinion tailored to one’s own precise circumstances. Wealth managers need to keep a keen eye on the enriched client experience that digital wealth firms will offer. The enlightened will take second-mover advantage and adopt certain aspects of the digital firms’ offering. Those that choose not to will very quickly appear out of touch.’

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Dirk Klee, COO & head of WM digital strategy, UBS Wealth Management, Zurich

‘While we may be happy for robots to clean our house or serve us food, when it comes to money, like love and health, people want the human connection.

‘We at UBS Wealth Management invest heavily in our digital capabilities to give clients the kind of experience they expect and for us that means the best advisers, backed by top-class technology.

‘Look at the current volatile markets to see the power of humans over robots. As tensions rise, clients want to know that a human is in control and they don’t want to place their trust in a machine’s judgement. Now more than ever, clients understand the value of a human adviser.

‘So for UBS, robo-advisors are not going to replace our people, they are going to complement them. Our business is about relationships, and software – no matter how cutting-edge – can’t replicate those.’

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