Robo-advisers are not the fundamental disruption feared by the financial advice industry but instead are a catalyst among traditional advice providers to move into the digital world. New research from global research and consulting firm Cerulli Associates projects the digital advice market to exceed US$83 billion by the end of 2016, with more than 75% of those assets within platforms at two firms recognised as top brands within the investment services industry. "We believe that it is essential for traditional financial advice providers to view digital advice delivery not as a force that will displace them, but instead as a way to broaden their opportunity to deliver deeper levels of advice to a wider client base," Cerulli director Scott Smith said. "The question is not whether traditional firms will offer digital engagement platforms, but which will best connect their advisers to clients in ways that highlight the value of advisory services beyond commodified aspects of portfolio management." Despite the penetration of low-cost robo-advice across the financial landscape, Cerulli found that investors still perceive advisers who can understand their life complexities as highly valuable. "Households' perceived need for investment advice has increased since last year," Smith explains. "With ongoing geopolitical turmoil, households continue to seek advice from a professional who can help them manage the turbulent times by focusing on goals and staying the course versus making panicked decisions that will have a negative impact on a portfolio."
Robo-advisers should be seen as a way for traditional financial advisers to "deliver deeper levels of advice to a wider client base" not a threat, says SmithScott Smith, director of research and consulting firm Cerulli Associates. The company estimates the digital advice industry to be worth $83bn by the end of 2016, with around 75% of those assets held by two "top brand" firms. Human advisers will still be required as "households continue to seek advice from a professional who can help them manage the turbulent times", said Scott Smith.