Despite discussion around the threats of robo-advice, the chief executive of one advice firm has said automated advice will actually help to attract clients to bespoke advice firms.
Speaking to SMSF Adviser, MGD Wealth chief executive John Barton said from the evidence he’s seen a lot of the self-directed investors using robo-advice as a standalone option at the moment will for the most part require more personalised advice down the line.
"I think it’s definitely a complement [to financial advice], and in some cases it’s an entrée," said Mr Barton.
"[For example], a younger client with a smaller balance, setting up a fund, implements basically an automated on-boarding tool, with very little strategic advice, maybe no asset consulting advice, but relatively over time as their income grows, their wealth grows, their experience with markets is maybe a little bit up and down, they may then want strategic and or some investment advice over time," he explained.
"They’re going to look to engage with someone with that advice, therefore I see robo as a complement to what we do, not direct competition."
While there will be some segments of the market that will only ever want purely self-service advice and another completely dependent on advisers, there is a middle segment in between that wants robo-advice initially and wants personalised advice later on.
Mr Barton also pointed out some of the strategic advantages for practices.
"I think robo-advice can enable an advice firm to reduce its costs in the back office, and still support a high-touch, high-quality, high advice personal front end model," he said.
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