Man or Machine?

In March 2016, the Financial Conduct Authority stated in its Financial Advice Market Review that up to 16 million people could require fi nancial advice but are unable to aff ord it. The FCA believed more “online automated advice models that have the ability to deliver advice in a more cost-effi cient way” was required. In other words, robo-advice.
Now, research undertaken by Charterhouse Research shows that 40% of mortgage intermediaries feel threatened by the rise of roboadvice; 5% perceive it as posing a signifi cant threat to themselves or their business.
Our research reveals a direct correlation between perceived threat from robo advice and the volume of mortgage business written by an intermediary that smaller producers perceive more of a threat to their business than larger producers – 45% of those producing 5-10 mortgages a month felt threatened by robo-advice, while just 28% producing 21 or more mortgages a month felt the same.
Looking at appointed representatives versus directly authorised intermediaries, the former see more threat to their business than the latter; 48% of appointed representatives perceive a threat (with 6% seeing that threat as being signifi cant), while 33% of their directly authorised counterparts feel the same (4% signifi cant).
Robo-advice does appear to pose more of a threat to intermediaries focused more on the ‘vanilla’ products, where robo-advice is a real alternative for the consumer. Intermediaries need to demonstrate their added value to protect themselves.
Please download the PDF document to see the full article, including graphs.

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