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Fintech no threat to advisors... at least not in some segments

By Andrew Rickard | May 09 2016 11:32AM

While Chartered Financial Analysts (CFAs) do not believe that robo-advisors represent any serious competition to those working in the high-net worth or institutional markets, many do think that they could replace humans in the mass affluent demographic.

The CFA Institute recently polled its members to find out how they believe fintech could shape and even disrupt the asset management industry. Of the 3,803 people surveyed, 92% of respondents were CFA charter holders.

Mass affluent market

The poll revealed that 89% of respondents think automated financial advice tools will lower consumers’ investment costs, and 62% believe that robo advisors will provide more people with access to advice. However, most are of the opinion that automatic advice will appeal predominantly to the mass affluent market, which is generally defined as those with $100,000 to $1,000,000 of liquid assets.

Of those surveyed, 70% think that mass affluent investors will be "positively affected" by automated financial advice tools, and 88% expect automated financial advice tools will replace at least some engagement with human advisors in this demographic. This is not the case for the ultra high net worth market, where only 30% believe that computerized advice will replace the personal touch. Respondents also think that advisors working with institutional investors are also unlikely to be replaced: only 32% believe robo-advisors could displace some or all of the human functions in this segment of the industry.

Relatively unsophisticated

"Given the relatively unsophisticated nature of automated financial advice tools to-date, it is probably not surprising that respondents think it is unlikely that automated financial tools will replace engagement with human advisors for institutional investors and ultra-high net worth investors. Both these groups typically require complex, tailored advice," reads the report. 

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