More than a quarter of all financial advisers do not see any positive effect on their business from robo-advisers, with a whopping three-quarters fearing regulatory issues that will damage their business.
And more than two-thirds of advisers surveyed said that they suspect that robo-advisers will not provide the best advice to their clients.
In a nationwide survey of advisers carried out on behalf of Prudential, 76% said they were worried about possible long-term compliance and regulatory challenges.
However, developers of robo-advice software will be heartened to learn that the situation is improving, with attitudes to robo-advice changing over the past year.
Nearly three-quarters (69%) now agree with the proposition that “technological-based solutions can help to close the advice gap”.
Fewer than one in five (17%) saw positive benefits from robo-advice when asked the same question in a survey last year.
Robo-advisers are here to stay
And two-fifths (41%) of advisers said they planned to launch their own version of robo-advice in the coming year, offering the service alongside traditional advice.
Nearly half (46 per cent) of advisers believed that offering robo-advice will help their business grow by enabling them to help clients with smaller funds, while just 27% disagreed.
But as well as being concerned about regulatory and compliance issues, there was concern that robo-advice solutions are a threat to adviser businesses.
Some 40% of advisers are worried about their firms losing out to technology-based advisers, while more than half (54 per cent) say robo-advice is suitable only for clients with smaller funds.
‘Growing acceptance’ of robos
Head of Prudential’s business consultancy for advisers Paul Harrison, pictured left, said that there was a “growing acceptance” that robo-advice has a role to play but that at the same time advisers had real concerns about the potential regulatory impact it will have.
He added that many advisers remain sceptical about the risks and rewards of robo-advice, although, he said, “improved technology can bring greater efficiency, reduce costs and help advisers to serve clients better while continuing to run viable businesses”.
And he pointed to the fact that views are changing rapidly as technology expands. In the face of such developments, he said, “advisers will need to adapt to prove the ongoing value of bespoke advice and benefit from the opportunities technology offers”.