Other parts of this series:
As we discussed in our previous blog, investment advisory firms in Europe—including independent firms and those operating as part of banks and insurance companies—are looking at ways to counter the inroads made by FinTech companies, specifically those offering products and services based on the concept of robo-advice.
The key for traditional firms lies in innovation. Although sophisticated customers with complex investment needs will likely continue to rely on their trusted advisors, the advisory firms cannot afford to ignore the threat posed by the new arrivals. If today’s players fail to introduce convincingly innovative offerings—which customers perceive as providing genuine value that justifies paying a premium price—it will only be a matter of time before even the most loyal of customers turn to robo-advice and other FinTech offerings.
The question for traditional firms is how to innovate current business models. Investment advisors may not need to adopt B2C models. Indeed, this may be a classic case in which it might be better to be a “fast follower” than a “first mover”. A recent publication by two faculty members at the London Business School (“Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets” by Constantinos C. Markide and Paul A. Geroski) demonstrates that advisory market players can adopt the technological innovations that have been tried and tested by others, tailoring them to fit their own advisory business models and strategies.
In the third and final blog in this series, we will examine how traditional advisory firms can harness the benefits of robo-advice innovations and adapt them to their own network of bankers, financial advisors, or branch-based relationship managers.