Robo-advice may put local planners under pressure: Morningstar
Robo-advice can engage clients in ways the advice industry previously thought were too complex and may put fee pressure on suburban planners, says Morningstar.
Speaking at the Morningstar Conference in Sydney on 19 May, Morningstar head of adviser solutions for the Australasian region, Andrew Whelan, said robo-advice has been able to dial down perceived complexities within client engagement.
"Advisers who have been focusing their businesses on clients with simple needs will come under fee pressure," Mr Whelan said.
"New models of advice may challenge the need for suburban planners focusing on simple needs dotted around the suburbs."
Mr Whelan noted that pure-play robo-advisers are likely to fail, because the cost of acquiring the client is far too great for them to be profitable over the medium term.
However, he cited the example of the US in stating that people who have embraced robo-advice have 55 per cent more clients because they have been able to break down the geographic barrier.
"You can have clients in Brisbane, and service them equally well through your clients that live in your local area," Mr Whelan said.
"The local referral requirements are there."
Former CBA adviser permanently banned
The corporate regulator has permanently banned a former Commonwealth Bank-aligne...
Hayne devalued financial advice, says AFA
The Association of Financial Advisers has called out the Hayne royal commission ...
Brexit has inflicted serious damage, says advice CEO
Brexit has created unprecedented damage to the UK’s financial services industr...