The Place of Robo-Advisors in the UK Independent Financial Advice Market. Substitute or Complement?

Abstract

Perceived high fees, low-quality digital support, apparently complex products are a few of the reasons why investors and savers become less satisfied with services provided by Independent Financial Advisers (IFAs) and look for alternatives. Robo-advice is one of the alternatives. However, robo-advisory services on their own possess several limitations, including the lack of human interface, emotional support and need for social proof. The blend of traditional and robo-advisory into a hybrid advice model could fix the problem and provide benefits to all stakeholders, from traditional IFAs and robo-advisory firms to the end users - investors and savers.

The aim of this research is to review and understand in depth the structure and the peculiarities of the current IFA industry in the UK and, through a deep analysis of the IFA industry to understand the place of robo-advisory services within it. I also seek to understand what a possible outlook of the IFA industry could be in the future. The hypotheses are formulated and tested in the empirical part of research.