How about a disruptive change such as Artificial Intelligence...

How about a disruptive change such as Artificial Intelligence financial advice offered by a hypothetical new start up? The total pool of funds would still be there but may bypass traditional managers.

This is an interesting question, @IndexInvestor

While I have never worked in the financial planning business (or used the services of a financial planner, for that matter), I can certainly see an increasing role for automation in the sector.

But, the sort of automation I see as being likely to arrive (or that has already arrived, to some extent) is of the commoditised type, i.e. focussing a lot more on the intuitiveness and user-friendliness of the interface rather than on the sophistication of the underlying portfolio allocation algorithm. And that sort of automation, while potentially helpful and important, is not going to disrupt the industry.

I personally see it as very unlikely that full-on robo-advice will any soon replace the physical advisor altogether; the reason is simply that it is extremely difficult (if at all possible) to program a machine to have common sense, which I still see as being a very valuable asset in this business.

To give you an example, if a prospective investor declares to be a) long-term-minded, b) tolerant of market risk, and c) looking for a return significantly in excess of what bonds are currently paying, then a robo-advisor will always recommend buying an equity index of some sort, irrespective of whether its PE multiple is 15x, 20x, or 25x, irrespective of whether we are early or late in the economic cycle, and pretty much regardless of how heavy certain sectors happen to be within the index. I just don't see how a machine can be (reliably) programmed to caution a prospective investor against a certain market being "frothy".

If you look (again) at the S&P500, for instance, one of the reasons why it is currently so expensive in PE terms, so technology-heavy, and at such a late stage in the cycle, is precisely because in the US the majority of the daily equity volume is now traded by algos. Which, by construction, are very sensitive to the news flow but essentially insensitive to what is already priced in.