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Robo-advice to force planners to ‘prove’ their value

The rise of robo-advice will affect the financial planning industry in several ways, including requiring advisers to justify their value to clients, argues risk profiling firm FinaMetrica.

According to a report authored by FinaMetrica co-founder Paul Resnik – titled The Robo Revolution: Robo Advice Market Commentary and Analysis – robo-advice represents the most "significant development" in the delivery of financial advice in the past 30 years, and its rise will have several "dramatic impacts" on the industry.

The risk profiling firm said one such impact will be to make the provision of advice cheaper, which FinaMetrica says will force financial advisers to justify their value to their clients.

"Advisers are professionals who add value to their clients' financial lives. Be ready to prove that, because you will have to be able to supply that proof to charge higher fees than a robo," FinaMetrica said.

"The more holistic and detailed traditional advisers are, the more they will win.

"Robos are not currently good at complex matters such as tax or estate planning or insurance. Possibly we will see traditional advice operating to create the financial plan, with robos dealing with ongoing transactional needs," the firm added.

But while robo-advisers will "undoubtedly" replace some human roles, FinaMetrica said, they will not replace everyone.


"We believe that the impact will be overwhelmingly positive!" the firm said. "Don't believe the gloom that says robos will replace human advisers. They won't."