Almost half (48.5%) of advisers have said they or their firm will offer some form of robo-advice in the next 12 months, a study has found.
According to Prudential’s third annual Adviser Barometer, 48.5% of advisers said they will offer robo-advice in the next year, up from 41% in 2017. And 55.5% of advisers believe robo-advice will help their business grow.
Commenting on this shift towards integrating robo-advice, Prudential director of special business support, Vince Smith-Hughes, said: ‘There is a real change in the market in terms of how advisers are looking at this. Advisers are saying to a lot of clients "we can’t help you with our current process". That’s why they’re looking at other ways to provide advice. That’s a real change over the last few years.’
When asked whether robo-advice could help to close the growing advice gap, 75% of advisers asked in 2018 believed it could, in comparison to just 17% in 2016.
Matt Ward, communications director of financial analytics firm AKG, said robo is increasingly being regarded as less of a ‘threat’ and more of an ‘opportunity’ for advisers.
Both Prudential and AKG acknowledged that although robo-advice can assist with ‘simple savings decisions’ the advice gap is still growing. This is a result of more people taking money out of their pensions since the introduction of the pension freedoms and a greater demand for advice on inheritance tax.
‘The advice gap is growing in the decumulation space, but robo seems to be in the accumulation space, putting money in,’ Prudential tax expert Les Cameron said.
While these may be ‘low-value clients’ to start with, he said that if advisers are able to cater for them early on in a robo-advice capacity, they will then be able to build investable assets. ‘With more complicated needs later in the journey, they may then come on in a fully capacity,’ Cameron said.
Prudential business development manager Kirsty Anderson added: ‘The growing acceptance of the important role that robo-advice can play in tackling the advice gap and increasing business for adviser firms is striking.
‘Views are changing rapidly as advisers recognise how to adapt and integrate technology to complement the value of the bespoke advice they already offer.’
The study also found one in four advisers were working more than 50 hours a week, in comparison with a lesser 14% of advisers in 2017. Regulatory and compliance requirements, as well as business growth, were given as reasons for increased working hours.
An additional two-thirds of advisers said they work up to 30 hours a month on non-fee-earning activity including CPD administration, regulatory matters and marketing.