Despite an exodus of financial planners from the wealth industry, alternatives such as robo advice are struggling to get traction.

Since the banking royal commission major banks have exited the wealth market, and many financial planners have simply quit the industry at a “breathtaking” rate, according to Professor Jerry Parwada, Professor of Finance and director of academic strategy at UNSW Business School.

“We are yet to fully understand what have been the drivers of such shifts,” Parwada said. UNSW is now embarking on research to give more specific intel on why advisers are walking.

In the meantime, robo advice still has some way to go to serve the customers expected to lose access to increasingly expensive human advice.

KPMG wealth advisory partner David Bardsley said technologies such as robo advice held promise, but it would be some time before technology and the human element worked together cohesively to close the gap.

“Robo advice making recommendations around products is probably not where it needs to be, and at least three to five years away from being institutionalised and appropriately accessible to the masses,” he said.

Bardsley believed that technology would play a significant role in regulatory compliance, keeping advisers, institutions and consumers better aligned and compliant within the regulatory environment — “and that’s a good outcome”.

“Hundreds of billions of dollars are spent in Australia’s financial services environment to satisfy rapidly evolving regulatory expectations. This approach is no longer viable: the volume of change requires new technologies to be applied,” he said.

Centaur Financial Services CEO and AFA 2018 Adviser of the Year Hugh Robertson agreed that robo advice had some way to go.

“Robo advice has not really got the traction that people predicted but perhaps the marrying of advisers with robo solutions will be something that can reduce costs for clients and streamline business efficiencies to allow advisers to focus on what they do best – interact with clients,” Robertson said.

“Over the next few years I think we will see the emergence of more technologies that can streamline the financial planning journey for the client as well as improve functionality in the back office for the adviser in terms of compliance, CRM, document writing and portfolio management.”

In what may be seen as a setback for robo advice, two such tools were shut down in recent weeks over ASIC concerns. Both were owned by Lime FS and operated using algorithms and technology, without direct involvement of a human adviser. After reviewing a sample advice file, ASIC said the quality of advice generated was “inadequate”.

But some fintechs are forging ahead, with ASX-listed micro-investing app Raiz Invest this week announcing it grew funds under management by more than 50% over the past 12 months to A$394.6 million, which it attributed to successful robo advice.