The CEO of Capco, a business consultant dedicated to the financial services sector in Europe, recently suggested that it’s not going to be easy for UK regulators to keep robo-advisors in line providing regulators over here with lots of warning.
‘Propositions like this are going to continue to challenge the regulatory frameworks that we have. The regulation of advice is borne of the last model of advice, of regulating qualified professionals who were giving advice face-to-face,’ Copco CEO Andrew Arwas told UKs Wealth Manager magazine. ‘Over the course of the next five years, we will look at forms of regulation specifically designed for propositions such as these which are delivered direct to the consumer.’
Advisors worried about the impact of robo-advisors might want to consider what Arwas is saying and put your focus on what really matters and that’s providing good advice and service to your clients.
Let the regulators worry about the robo-advisors and if Arwas is right, they surely will.
“I think we will see a shift, a real root and branch review of what advice means and what customers want to be protected from,” said Arwas. “What they need to be protected from may shift, now that there are automated services.”
Investor advocates in Canada spend a lot of time comparing our regulatory environment to other countries such as Australia and the UK who’ve already been through an overhaul of their financial advisory system hoping to learn a thing or two to make things better here.
“It is an area where it is incredibly difficult to regulate. Because of course the regulator’s job is to protect investors,” said Catherine Tillotson of Scorpio Partnership, a UK wealth management research firm. “The way it works is you regulate the intermediary and once you remove the intermediary, the regulatory environment isn’t in a place to really regulate these new tools.”