Reforms like FOFA represent 'evolutionary' changes to financial advice, but wealth management is now facing a 'revolutionary' digital transformation, says a new white paper.
Pharos Financial Group and Madison Financial Group have released a joint white paper entitled Adapt or Die: the Impending Digital Tsunami.
The paper argues the advice industry is "consumed in matters that will give rise to evoultionary change" while failing to acknowledge the revolutionary technological changes that are taking place.
"[These] changes that will likely, in the fullness of time, prove to be game changing to many and/or all of our current dominant industries – including financial services," the paper said.
Fending off accusations of being 'melodramatic', the paper points to changes in the music industry, the publishing industry and to 'disruptive' operations like Uber and Airbnb.
"In financial services we need only look to Thomas Peterffy’s launch of his machine-based stock trading engine in 1987," the paper said.
"These ‘algotrading’ engines had [a huge effect] on stockbroker numbers – over 75 per cent of US trades are currently performed by them," it said.
Superficially, it may be easy to argue the advice industry is vastly different from music, books and travel.
"But much of the financial services offer is intangible, standardisable and consequently – digitisable," the paper said.
Therefore, to assume that advice will be immune from the digital threat is naïve, it said.
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