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Ignore robo-advice at your peril, says FinaMetrica

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By Reporter
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2 minute read

For members of the financial planning industry, making an uninformed decision to operate or dismiss robo-advisers may prove to be very costly, argues risk profiling firm FinaMetrica.

According to a report authored by FinaMetrica’s co-founder Paul Resnik – titled The Robo Revolution: Robo Advice Market Commentary and Analysis – the rise of robo-advisers has been the most significant development in the financial planning industry over the last 30 years.

However, with all the hype behind robo-advisers, Mr Resnik stressed that it is important to make informed decisions on using or not using the automation tools as the end result could prove costly for planners.

“Robo-advisers are likely to be as great a disruptor to the delivery of financial advice as Uber is to public transport,” he said.

“It could be an expensive mistake to make an uninformed decision to operate a robo-adviser or to choose to disregard or dismiss them.”

Highlighting a number of impacts robo-advisers will have on the financial planning industry, FinaMetrica said they will force planners to rethink their approach to investments.

“Robos deal in very low-cost investment structures and that is going to challenge current thinking, current practice and profitability. Like ripples in a pond, over time the effect becomes unpredictable even when it started out very structured,” FinaMetrica said.

FinaMetrica also said robo-advisers will continue to feature prominently within this financial planning industry, and will undoubtedly lead some human roles being replaced.

However, the firm stressed that the overall impact of robo-advisers will be “overwhelmingly positive”.

“Don’t believe the gloom that says robos will replace human advisers. They won’t,” FinaMetrica said.