It is difficult to ignore the process of digitisation within the financial services industry, in particular the growing role robo-advice, automation and artificial intelligence (AI) has to play in the financial advice sector.

New research from independent research and consumer insight consultancy Boring Money reveals that customer acquisition in the robo-advice sector is outstripping that of bigger online investment platforms.

Boring Money CEO Holly Mackay says: “Over the last three years we’ve seen about 1.8 million new DIY accounts being opened, and about one in five of these was with Hargreaves Lansdown. Although the robo-advisers have a small percentage of the assets pie today, they are punching above their weight in terms of customer acquisition. Almost one in three new DIY accounts opened over the last 12 months was with a robo-adviser.”

More revenue

According to a recent report by Intelliflo, advisers who fully adopt and use technology are generating up to £112,000 more revenue per year than those who just use the bare minimum.

Its report, which used data representing around 18% of the UK financial advice industry, found that firms who embrace its Intelligent Office software and use all the features via its integrations with partners and providers are realising greater returns.

Intelliflo says this is achieved “simply by being able to advise more clients”, with top technology embracers advising more than double the number of clients than lesser engaged firms.

Clare Farrell, director and independent financial adviser at Northfield Wealth Management says: “As much as technology definitely needs to be embraced in our industry I think it has some way to go before it is the chosen method for the majority looking for financial advice.

“At annual reviews I always ask my clients if they have logged onto their online platform to get their valuations, 70% say no, 10% haven’t even opened their paper statement. They pay us, as financial advisers, to manage this for them and in our case we work with the client how they want to work.

“If that is face-to-face, that is what we do, if they prefer phone, that’s fine. Although we have the facility I have not yet been asked to do a client meeting via Skype or any type of video calling, but I can see that this could become more popular in the future.”

Tough market

Chartered financial planner and former chairman of the society of financial advisers (SOFA), Nick Bamford says that technology is more readily being embraced by financial advisers in relation to communications, but it’s harder “to sell” to older clients when it comes to investing.

Bamford’s clients are largely from the “baby boomer” generation, the “sandwich generation (with parents and children) and geographical close to Cranleigh in Surrey, where his firm Informed Choice is based. When dealing with these sort of clients, his firm uses a mix of technology and “existing processes”.

“I think rob-advice and AI are high on peoples’ agenda, but when it comes to our proposition, people are keen on that ‘face-to-face’ element,” says Bamford.

Sabuhi Gard is an investment writer for Incisive Works

Further reading on this topic:

Financial advice remains a core need