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Robo-advice firms under pressure to source clients

Robo-advice firms under pressure to source clients

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By tlewis ·
November 12 2015

Robo-advice firms under pressure to source clients

While robo-advice is commonly seen as a disruptor within the traditional advice space, one expert has warned that it still faces challenges in terms of finding and engaging with clients.

Robo-advice firms under pressure to source clients
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Jeremy Kwong-Law, chief executive of automated advice solution BetterWealth, said automated advice providers face difficulties when it comes to sourcing clients.

"From the perspective of a robo-advice company, the challenge is always going to be distribution and [the ability] to fund marketing."

He argued that any great disruptive business succeeds on having a clear path to customer acquisition.

"I think [businesses] will need to find different ways to get to customers if they're going to win," he added.

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"The winner in the space is probably the one that can figure that out."

Mr Kwong-Law - who is still in the process of building out BetterWealth's ETF-focused robo-advice tool - indicated that another challenge faced by the automation sector is how to engage with advisers and convey to them the value of incorporating a robo-advice capability into their business.

According to Mr Kwong-Law, robo-advice complements advisers as it can serve a segment of the market that is unattractive to them.

"If anything, robo-advice is going to help advisers. We're going to [serve] customers that advisers can't currently serve," he said.

Mr Kwong-Law said for low-balance clients that are "uneconomic" for advisers to serve, robo-advice can provide guidance on creating a low-cost ETF portfolio.

"We are exploring ways to help the adviser maintain a relationship with low-balance clients so that they can engage in more strategic advice when the clients' balance grows to a meaningful level," he explained.

"We can be that one really easy part in a much quicker and cost-effective way [of providing advice]."

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