How big is the robo threat to wealth firms? Friday 26 Feb 2016

How big is the robo threat to wealth firms?

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.’

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.’

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.’