robo-advice: is this the future?
TRANSCRIPT
Robo-advice
iress.com
Chris Pitt – Head of Market Analysis7th October 2016
Is this the future?
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Robo-advice: Is this the future?
In its current, narrow focus?
Probably not
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Robo-advice: Is this the future?
Let’s broaden our definition to…
“The use of digital channels”
Any sales or advice process where the
consumer serves themselves to some extent
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Digital channels
Why are players so interested?
Reach new segments
Enhance service
Reduce costs
Improve compliance
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Robo 2.0
We’re already moving into a second phase of
robo / digital advice development
Players are tackling the barriers, like
finding cheaper ways to acquire
clients
Going beyond the narrow focused US style online
investment management proposition
Even developing intelligent
technology to interpret client
emotions (risk profiling)
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What is the market doing?
Market activity is significant and increasing
Project InnovateSet up by the FCA to encourage UK fintech growth
500+ requests
250+ supported Many with a robo-advice model
More new start-up platforms
Investment Managers, Life Cos & Banks
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Examples of market growth20
10
2011
2012
2013
2014
2015
2016
0
Growth of Bet-terment
AUM in billions of dollars
The Securities & Exchange Commission
(SEC)
22%
increase in its members’ client numbers
NutmegUser numbers on track
2-3 yearsuntil profitable
2016
2017
2018
2019
2020
0123
Estimated growth of U.S. robo-advisors
AUM in trillions of dol-lars
Source: Bloomberg via A.T. Kearney
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What is fuelling market growth?Government
Pensions Freedom
Baby-boomers
Rising consumer
expectations
Pension crisis
warnings
Millennials
Success of online
banking
Advice gap
Market growth
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The naysayers are emerging
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The naysayers are emerging
“It will never catch on” - always a sign that the winds of change are blowing strong
“The horse is here to stay but the automobile is only a novelty - a fad.”President of the Michigan Savings Bank, Adviser to Henry Ford’s lawyer, 1936
“The internet will soon go spectacularly supernova and in 1996 catastrophically collapse” Inventor of the Ethernet, 1995
• The automobile• The telephone• The internet• The household computer
• The iPod, iPhone and iPad• Facebook• Online shopping• Music streaming
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• Only time will tell
• Many technology initiatives do fail and timing can be an issue
• Disruptors typically take a while to become well-adopted and generate a profit
So, is robo-advice the future?
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• Several robo-advisers have already made a profit by selling to bigger players and others are on track
• We are seeing promising levels of both supply and demand in the robo space
• The direction of travel has got to see the application of more technology, not less
• History tells us that those at the forefront of such change do well and the laggards typically don’t survive
So, is robo-advice the future?
Thank you
iress.com
Email: [email protected]: 07920 135708
Chris PittHead of Market Analysis
LinkedIn: Christopher PittTwitter: @chrispitt11