Traditional wealth management providers have nothing to fear from robo advisors, according to panellists at the Summit for Asset Management in London.
One speaker, representing a robo advisory start-up, said that these digital advisors have already had a big impact and are “not going away”, while another noted that the technology solves a demographic problem in the UK, encouraging millennials to engage with their finances and delivering a scalable platform that allows them to do so.
This second speaker also noted that this has sparked traditional asset managers to move towards solutions that drive a better outcome for the client—solutions that have to be simple, low-cost and transparent.
While asset managers have been focusing on regulatory change, they are starting to move into the “era of digitisation” and trying to avoid a “Kodak moment” in which they see the change coming but fail to react quickly enough.
The speaker elaborated: “Everyone is thinking about how to engage customers in a different way”
Another panellist suggested that the phrase ‘robo advice’ is in itself is a bit of a misnomer. He compared it to online shopping, which is now considered merely shopping.
“This will just be the standard way,” he said.
When asked if robo advice will be the death of traditional wealth management, one panellist said: “The short answer is no.”
As wealth increases, whether that’s individual or institutional, management increases in complexity, the speaker explained. Entities that start with robo advisors may move to the next level of wealth management, and that transition should be as smooth as possible.
Another speaker noted that traditional wealth managers can “view it as an opportunity or a threat”, adding that the level of efficiency gained, increased capacity, risk management capabilities and improved customer experience present a big opportunity throughout the industry.
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