Another day, another article about Robo-advice; but a valuable one.
It's interesting that a number of industry commentators are already writing off the technology for a variety of reasons, but in my view it is far too early to say how it will pan out.
There will always be immense value to be had by working one to one with a financial planning professional - but even that relationship will involve technology at many stages of the interaction, and that may well include the very start of the interaction, meaning that Robo and real advisers are not two separate propositions where you choose one or the other.
Many in the industry suggest, as does this article, that Robo technology will fill the gap between those needing financial advice and those who can afford it. What it doesn't address is whether or not people will want financial advice in the first place. Much much more work needs to be done by the industry, the regulator and government to improve education on financial matters and the importance of developing a financial mindset, such that regular interaction with a financial professional (robot or otherwise) becomes second nature.
You can lead a horse to water, but you can't make it drink etc.
Some years ago I was credited with saying that consumers will use the social networking app Foursquare to find IFAs. What I actually said was that consumers will increasingly find, review and refer IFAs in new ways - primarily involving technology, including geo-location tools (which was at the heart of Foursquare). Foursquare and apps like it never were going to be THE new way that consumers find anything, yet geo-location tools are now commonplace in how we find product and service providers across a wide range of industries.
In short, Foursquare wasn't the finished article, just as today's Robo advisers aren't the be all and end all of online financial advice.
When new technology first appears, we often get very excited about it and expect it to quickly be used in a variety of different ways, only to be disappointed a while later. What we're seeing right now is Robo-advice going through a classic hype cycle, yet the 'finished' concept is a while off yet.
Technology evolves and people have a habit of evolving with it and adapting to it, and whilst it's fascinating to see this new way to obtain financial advice, we have a way to go until Robo advice is commonplace in whatever shape or form it will evolve into.
In the meantime, advisers must not bury their heads in the sand, and should study and observe developments in technology - and not just Robo technologies.
One way or another, technology will be the single biggest factor impacting the success or otherwise of financial advice professionals, so it's vital that every financial advice firm - large or small appoints a 'Digital Mentor' or 'Digital Non-Exec Director' whose sole role is to stay on top of what's happening in the world of technology and to report in once a quarter.
Education is the single best way that IFAs and financial advisers can better prepare themselves for changes that are ahead in their profession, because technology will impact them both positively and negatively in ways that we haven't even thought of yet.
That can only be good news all round. By helping more of us to improve our financial health, roboadvisers won’t just be doing their bit for the nation’s future. They’ll also be helping advisors, too; incubating a healthy pipeline of customers who, when the time is right, will come knocking for some good old fashioned human insight.