Robo-advice may present an opportunity to reach consumers who have not sought information on their finances, according to a new report from Rice Warner.

The actuary says that based on global experience, robo-advice falls into three categories:

• Fully automated with no human interaction;
• Hybrid, with various levels of sophistication including the option of consulting a human; and
• A full-service advice model that uses technology to leverage off a consumer’s online discussions with the provider.

Rice Warner says the full-service option will be aimed at wealthier clients with more complex issues.

“Technology developments allow the delivery of scalable online advice tools to a large audience in a cost-efficient manner,” the report says.

“Properly utilised, robo-advice will allow providers of advice to extend their value proposition, and this will likely include many younger consumers.”

Rice Warner says robo-advice may allow traditional advisers to concentrate more on their role as behavioural coaches.

“It is relatively early days for advice technology, with solutions only scratching the surface on a range of advice topics and strategies, including adequacy of retirement income and insurance. Currently, advice being provided by robo-tools is relatively basic, but it will become more sophisticated as the environment matures.”

Insurance in superannuation funds is one area of opportunity.

“Super funds are likely to rely more on advice technology as a means to improve and expand their existing advisory services, member engagement and business intelligence. The role of robo-advice, in combination with advisory services, needs to be well thought through.”

Rice Warner says the role of robo-advice in super will depend on how much involvement funds want with financial advisers.