Robo-response
Other priorities for the wealth manager community as identified by Pershing are the review of ‘advice’ in robo-advice propositions; as well as the new Senior Managers Regime (SMR). “We know that all our clients are very well aware of the risks around client money and robo-advice is one of the most heavily discussed topics of the day,” says Tibergien.
“But we hear far less about Mifid II and SMR, both of which will affect the whole value chain, but SMR in particular has personal implications for every manager in the industry. We’re working with our clients to help ensure the move to SMR goes well.
”When the FCA published its final rules on SMR in July, the focus was very much on making the banking sector more accountable. However, following announcements from the Treasury in October, it is clear the rules will apply to the entire financial services industry from 2018.
As Pershing’s experience suggests, robo-advice was the big topic being discussed in the financial services industry in 2015. As an American, Tibergien says he has seen much faster developments in the concept on his side of the Atlantic – the worst-case scenario being that robo-advisers cut out the adviser ‘middle men’. “It is clear from the US that many robo-advisers focus on the lower end of the market with small account values that don’t provide the investment return needed to make face-to-face advice viable,” he says.
“For this reason, robo-advice fits more with branded established entities as part of an overall proposition, with discretionary, advisory and financial planning to balance cost. We know that the good adviser firms will work out what their value proposition is and define how and where they can deliver the most value.”
Drive to DIY
In terms of the big challenges facing wealth managers in 2016 and beyond, aside from the cost of regulation and ongoing legislative change, Tibergien suggests that better technology, and more visible charges following RDR, have contributed to an increasing trend for DIY investing. “Advisers know that most people first approach a financial adviser in response to some sort of change in their life, and people will always need advice that is specific to their circumstances and objectives,” he says. “Good advisers have always demonstrated that they understand clients’ situations and can help.
