The network argued that advisers are too complacent in believing that new direct-to-consumer propositions – especially those implemented by lenders – would not impact their business levels nor their operations.
It said that “significant levels” of advisers were “underestimating the breadth of existing clients that might be keen to transact their mortgage via a robo-advice proposition”.
“Clearly the direct to consumer propositions have made a lot of noise, with a lot of marketing budget, and some advisory firms may be blasé about the threat they pose to their business, and to a large extent I agree that this might not be earth-shattering,” said Rory Joseph, director of JLM Mortgage Services.
However, he noted that lenders were already employing new technologies to capture existing borrowers – in effect pushing consumers down an internal robo-advice route that advisers may struggle to retrieve their clients from.
Joseph continued: “Where robo-advice will make a huge difference – and we’re already seeing this – is the way lenders utilise an internal version. That’s where they’ll contact existing customers electronically, asking them if they want a new deal, while waiving the ERC in order to secure their business.”
“This will appeal to customers who are used to consuming online and don’t want to speak to advisers or bank staff and the like. At the pace this is going, this type of activity could well become the norm, with a retention process automated by lenders becoming a dominant force,” he added.
Adapt, or atrophy
JLM argued that consumers – whether they were digital natives, or in their 40s or older – were becoming more accustomed to having technology embedded into their lives. So if advisers want to retain their clients they need to allow borrowers access to advice in the ways they want.
“Almost everyone goes online to start the journey,” said Sebastian Murphy, head of mortgage finance at JLM. “I think you only need to consider how everyone, including advisers, uses technology to purchase goods and services to know that robo-advice will have a major appeal for many.”
To accommodate shifting consumer demand, the network argued that advisers need to either incorporate robo-advice propositions into their offering, or at the least, provide their clients access to automated processes themselves
“However much we might not like it, lenders are going to continue to target their existing borrowers electronically, to keep them on their books at far less cost than accepting business from an intermediary,” said Murphy.
“I think we have to get away from the mindset that this can only be a threat – it is, but it can also be an opportunity and a valuable tool that can help advisers provide the service their clients want and retain their business,” added Joseph.