There are no regulatory impediments to sophisticated software snaring a large share of the financial advice market, say two senior lawyers.
Robo-advice, or financial advice provided by a computer program rather than a trained professional, is already making inroads in the US and has made limited appearances here in the wealth management sector.
Allens Senior Associates Simun Soljo and Annett Schmiedel say there is an increasing buzz in the financial services sector about the prospect of robo-advice but many mistakenly think regulations stand in the way.
“It seems to us that the regulatory impediments can sometimes be overblown,” they say.
“In most ways, the issues are the same as for advice given in person.
“The scope of the advice needs to be agreed and disclosed, and sufficient information needs to be gathered for the scoped advice to be appropriate for the client.”
Soljo and Schmiedel say if robo-advice programs are properly constructed, they should be able to offer transparent and consistent advice, free from conflicts of interest or mistakes.
“Simple personal advice tools are already being offered,” they say.
“They tend to focus on basic portfolio construction or asset allocation advice.”
They predict the next phase will see more sophisticated and comprehensive online tools to be created, or perhaps half-way solutions deploying some level of human interaction.