Rise of robo-advisors in mortgage business could have an impact

Seven out of 10 Canadian banking customers say they would be willing to receive wealth-management advice and services that are solely computer-generated, without the help of human financial advisors, according to a new survey released by consulting firm Accenture on Thursday.

Specifically, 77% of Canadian banking customers said they would welcome robo-advice from their bank in terms of how to allocate investments, while 70% said they would be willing to receive robo-advice related to retirement planning, according to the report, Banking on Value: Reward, Robo-Advice and Relevance.

“What we’re seeing with almost all financial services right now — whether it’s investment advice, banking, or frankly even insurance —is the way that consumers, particularly younger consumers, [want to] interact with the bank is through a phone or tablet,” says Robert Vokes, managing director of Accenture’s Canadian financial services practice.

In fact, a simple and intuitive digital experience “has a huge impact on take up, adoption, and engagement [on banking services] for those consumers,” he says.

The report, based on a survey of more than 4,000 banking customers in North America conducted in March, found that banking clients said they preferred the perceived speed and convenience — as well as the lower cost — of receiving advice through the automated channel.

However, there may be a disconnection between the Canadian banking clients’ stated interest in robo-advice and what types of wealth-management services they ultimately choose, Vokes says.

“While people say they’re willing to do things all in an entirely automated fashion, their actual behaviour tends to be a little bit different,” he notes

Much like the advent of the direct brokerages 25 years ago, a certain segment of investor will flock to the new channel while most will continue to need at least some form of personal advice, Vokes notes.

In the U.S., there has been a “massive surge” in the popularity of robo-advisors over the past three years, Vokes says, while in Canada, the comparatively new robo-advice market still represents a small slice of the overall industry.

Most, if not all, North American financial services institutions are actively considering offering adding robo-advice services, if they haven’t done so already, he says.

Some will decide to go all in on robo-advice, while others choose to give automated advice a pass. A large middle group of banks will ultimately opt for a hybrid robo- and personal advice type of business model, Vokes believes.

“You’re going to use robo-advice to either support or help an advisor manage the right portfolio for their clients and be part of their overall planning and advice-based business,” Vokes says. “We’re seeing more and more banks adopt that type of approach in terms of that space.”

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