I have just passed my 30-year anniversary as an adviser. Back in the day, it was possible for any Tom, Dick or Harry to become a “financial adviser” with just a few weeks of basic training. Thankfully, it is a different world today, with competence the main priority for firms up and down the country.
It got me reminiscing over some other things I remember from way back when.
With the awakening of constant change, I recall the old curmudgeons repeatedly calling the death of the industry. Take, for example, when commission disclosure was announced. It is hard to believe that, once upon a time, illustrations from product providers made no mention of the payment the adviser was due to receive.
Even harder to comprehend now Mifid II requires every charge known to man to be fully documented.
Today, I am honoured to be among a band of bright people who have shown we are more resilient than ever and able to work through the challenges that face our community day in, day out. And talking of challenges, I have been watching with interest the robo-advice debate rumble on for some while.
Again, there were a number of people that said this shiny new thing would alter the way advice was delivered.
While I firmly believe we do need to embrace new methods of working, and using technology with some form of artificial intelligence does support this, I suspect a number of those having jumped on the bandwagon may live to regret it.
My gut instinct when the whole robo thing kicked off was to wait and see where it headed; let others find a path through the regulation and cost of bringing such a new concept to market.
To date, I see no conclusive evidence it will play out well. Headlines such as “UBS set to shut robo-advice arm” certainly do not help, and then there are the likes of Moneyfarm, whose losses were £14m last year on the back of revenue of £1m and costs of £15m. The latest available figures for Nutmeg are also pretty depressing, showing losses of £12.4m in 2017.
It would seem new business acquisition costs are simply too high and growth is taking longer than expected. It certainly makes you wonder how much longer the financial backers of these businesses will last before more of the robo firms fold.
While the theory behind robo-advice is a great one – helping people start to save for their future at a time when they do not have sufficient wealth to engage with a financial adviser – we are still yet to crack the core issue. Perhaps the wider public is not actually that interested in using a robo platform because they are still not all that interested full stop.
The old adage that you can lead a horse to water but you cannot make it drink springs to mind.
So, until the UK can crack the lack of interest in personal finances and saving, the majority of people will simply not choose to save. I very much doubt a robo-advice solution will be sustainable until this issue is resolved.
Tracey Evans is joint business owner and principal financial planner at Juno Wealth