GlobalData wealth management analyst Sergel Woldemichael said that despite the recent sale of UBS’s SmartWealth platform, the robo-adviser industry still has a future.
“This latest closure is not the end for automated service: robo has the future, and UBS provides lessons to learn,” said Mr Woldemichael.
He said that the robo-advice field is appealing to the mass market and offering competitive prices.
“Setting fees at up to 1.8 per cent, while most UK robo-advisers charge less than 1 per cent, did not help SmartWealth to attract price-sensitive retail investors either,” Mr Woldemichael said.
The market is on the rise but the industry may just be ahead of its time and will need to wait for the next generation to take off, he said.
“While robo-advice is here to stay, it will take time to cement itself. The digitally-savvy next generation will embrace an automated service and big banks should capitalise on this,” Mr Woldemichael said.
The way to succeed in the field was to offer competitive prices that could compete with the low cost of many smaller firms, he said.
“A big brand is not enough to justify much higher fees. To succeed, incumbents will have to provide a level of service, and prices, that are genuinely competitive with those offered by start-ups,” Mr Woldemichael said.
Robot advice, an oxymoron. First heard about this five years ago, hasn’t progressed since then
Robo advice here to stay? It never “got here”, despite the hype, every single standalone robo advice business has largely failed. It is just math, if it costs you $1,000 to source a client and they pay you $250 a year that is not a viable business model. I would suggest the best thing robo advice businesses can do is go hire a few good advisors (as many of them have started doing).