This content is from: Portfolio

Google and Amazon’s Next Disruption Target: Financial Advice?

An Accenture study finds a large and growing number of investors that want digital advice. Financial service firms better watch out.

  • Frances Denmark

If a new, global study by consulting firm Accenture is correct, Amazon.com’s founder and CEO Jeff Bezos may find himself getting back into the asset management industry.

Accenture’s “2017 Financial Services Global Distribution & Marketing Study,” which focuses on consumers of investment-related products and services, reveals new opportunities for companies that want to leap into the evolving digital market for investment advice. One finding: Some 79 percent of U.S. consumers would consider receiving investment advice from the most popular names on the Internet.

If banks and other financial-services companies are unable to act fast enough to provide automated advice supplied by what’s popularly known as robo-advisers to thousands of investors clamoring for it, Accenture believes the vacuum will be filled by four digital giants known collectively as GAFA: Google, Amazon.com, Facebook, and Apple. That could bring Bezos — who once worked at hedge fund firm D.E. Shaw — back into asset management.

The GAFA companies have apparently set a standard for a state-of-the-art customer experience that banking and financial services cannot offer. A large and growing segment of younger investors are “channel agnostic,” meaning it is becoming less and less important to them where investment advice comes from, Accenture finds.

Stephanie Sadowski, Accenture’s leader of the distribution and agency management practice for North America, compares the new investment-advice frontier to changes in the telecommunications industry in the early 2000s. At that time, phone service providers had a choice between becoming content providers or so-called dumb pipes. Today, banks and financial service companies face the choice between providing robo-advice or becoming dumb vaults — that is, simply repositories of assets.

The Accenture study, which surveyed 32,000 customers in 18 markets, found that consumers have grown comfortable with computer-generated support and recommendations because of their past interactions with GAFA. Customers understand that data has become currency, and they will pay to get something in return: solid investment advice.

There remain, of course, consumers who are driven by gold-plated, personalized, high-touch advice, while others seek the best price, or the best value for their money, Accenture found. Banks, independent broker-dealers, wealth managers, and other financial-services providers will need to determine how to structure and provide their offerings based on which consumer groups they want to serve in the brave new world of the robo-adviser.