Emerging automated online financial advice options are providing a cheaper option for clients, putting pressure on advisers to rethink their engagement strategies, according to Business Health.
Speaking to ifa, Business Health director Terry Bell said advisers will need to adapt in order to attract newer clients - especially from Generations X and Y, who may be attracted to these “robo advisers” as a cheaper alternative.
“If advisers simply intend to compete on a price basis alone they will be in trouble,” Mr Bell said.
“Because people will search, and they will eventually say, ‘I can go to one of those newer sites that [provide advice online] and at an eighth of the price.’”
Mr Bell said automated advice services will drive advisers to think differently about their business and how they can provide a more attractive service to clients.
“So that is things like: how do you communicate [with clients]? do you meet with clients face to face? do you run events? or do you expand your services to cater to new needs of clients?” Mr Bell said.
He added that while automated advice services will provide challenges for businesses, independent groups will be able to adapt quickly to the changes needed to compete against the cheaper alternative.
“They should be able to react quicker as opposed to a large group that is institutionally-linked,” Mr Bell said.
“Having said that, they are going to need help to be able to do so.
“The challenge is who is providing the support and who is providing the technologies that can allow for boutiques to adapt quicker. That is where you would expect the larger institutions with the resources to be able to compete,” he said.
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