Conveying the value of robo-advice to planners is one of the biggest challenges for tech firms looking to get a foothold in the advice market.
Jeremy Kwong-Law, chief executive of automated advice solution BetterWealth, said automated advice providers face difficulties when it comes to sourcing clients.
"From the perspective of a robo-advice company, the challenge is always going to be distribution and [the ability] to fund marketing," he said.
Mr Kwong-Law argued that any superior disruptive business succeeds through having a clear path to customer acquisition.
"I think [businesses] will need to find different ways to get to customers if they're going to win," he said.
"The winner in the space is probably the one that can figure that out."
Mr Kwong-Law – who is still building out BetterWealth's ETF-focused robo-advice tool – said another challenge that the automation sector faces is how to engage with advisers and convey to them the value of incorporating a robo-advice capability into their business.
Robo-advice complements face-to-face advice since it can serve a segment of the market that is unattractive to advisers.
"If anything, robo-advice is going to help advisers. We're going to [serve] customers that advisers can't currently serve," he said.
Mr Kwong-Law added that for low-balance clients who are "uneconomic" for advisers to serve, robo-advice can provide guidance on creating a low-cost ETF portfolio.
"We are exploring ways to help the adviser maintain a relationship with low-balance clients so that they can engage in more strategic advice when the clients' balance grows to a meaningful level," he explained.
"We can be that one really easy part in a much quicker and cost-effective way [of providing advice]."
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 16 Nov 2018Government sets $51m to pursue misconductBy Eliot Hastie
- 16 Nov 2018The financial advisers most people don’t read aboutBy James Mitchell
- 16 Nov 2018Clients expect advisers to understand their situationBy Eliot Hastie
- 16 Nov 2018Retirees hit hardest by franking credit changes, says FSCBy Sarah Simpkins
- 16 Nov 2018Trust in advice more important than everBy Stephanie Aikins
- 15 Nov 2018We’ll lose advisers through FASEA but it’s necessaryBy Adrian Flores
- view all