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Ian McKenna: Advisers can cash in on new robo-advice options


Last month saw the launch of Dynamic Planner’s Access Advice; another significant option for advisers who wish to offer their clients automated advice.

Distribution Technology has approximately 7,500 users of its Dynamic Planner system. Add to this the 14,500 users of Intelliflo’s Intelligent Office (which provides the Automated Advice function) and, while there will be some duplication within the two user bases, it is fair to assume over half the adviser community now has the opportunity to offer some form of automated advice.

There continues to be a small but vociferous minority that insists there is no place for digital advice in the UK.

But judging by the number of phone calls and emails I am getting from firms asking who they should choose as their supplier, the majority are now looking to take advantage of the change that is underway.

Gunning for adviser business

There are actually some key differences between Dynamic Planner’s Access Advice and Intelliflo’s Automated Advice systems. The Dynamic Planner product enables advisers to direct some of their clients towards a semi self-service offering, where the new business processing and submission is still carried out via the adviser. Intelliflo’s offering is a fully self-service proposition.

Let me be clear: I am not saying one is better than the other. At this stage it is more a matter of which of the two approaches you prefer. Both groups should probably learn from each other and add the other option as well.

I would also like to see each provide the opportunity for consumers to select a non-advised service if that is what they want. Although many advisers will disagree with this view, the growth of non-advised business in recent years shows just how many consumers wish to follow that route.

Does it really make sense for businesses to force clients down the advised route, with the liabilities that attaches to their firm, if that is not what the customer wants?

Meanwhile, the Intelliflo system only offers Isa and GIA investment vehicles, while Access Advice is limited to just Isas. I would like to see both add pension accumulation as soon as possible.

In its current format, Access Advice can offer account opening with the Aviva and Elevate platforms, although it says it could potentially be configured to work with any platform.

Fair enough but the challenge is getting the necessary development work done. Intelliflo currently only offers Aegon’s Cofunds proposition as a platform partner.

Each offering allows the adviser to take considerable control of the advice process, defining where the checks and balances are built in to ensure any cases not suitable for an automated service are directed towards a human.

This is a really crucial part of each system and advisers should spend a good amount of time making sure they fully understand which cases will be passed and which funneled out.

I would expect the FCA to ask firms to demonstrate how they explored this and their understanding of the outcomes in a range of scenarios on future compliance visits.

Picking up with platforms

Neither system (nor, for that matter, any other I have seen in the UK yet) has the ability to process increments to existing contracts. This highlights their infancy, although they will undoubtedly become far more sophisticated in the months and years ahead.

The ability to process transactions like increments will be as much driven by the technology capability of the underlying platform as the adviser software.

I expect advisers’ established system suppliers – either client management or financial planning systems – to become the preferred option for the majority of firms. Integrating yet another third party system will bring unwelcome burden, so standalone suppliers will struggle.

In addition, there are far more platforms chasing access to a small number of key software suppliers. Too many platforms just do not understand the crucial role software suppliers play for advisers.

Their failure to recognise this means perhaps two-thirds of today’s platforms are in the process of precipitating their own demise.

Distribution Technology’s move to join Intelliflo in providing an automated advice solution that can deliver new business to platforms puts pressure on other client management and financial planning systems to deliver such services. I expect to see many more entrants in the coming months.

Ian McKenna is director of the Finance & Technology Research Centre



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. As the debate about robo-advice matures I think it is important to understand that there are two aspects to advice. One is about planning and one is about selecting the best product solution.

    Robo-advice my be good at the 2nd (arguably the easiest part) but cannot deal with the first.

    Good planning involves a good deal of behavioural stuff that automated process will struggle to deal with.

    As the value of advice is increasingly with the planning, I struggle to see where the ‘cashing in’ is

    • Good point Billy. I see most new entrant B2C investment distributors totally focused on selling investments, not any form of general financial planning. These new digital simplified investment advice portals from Intelliflo and DT, while a welcome development, are still aimed at selling investments, rather than providing wider planning, precisely because planning advice is hard to a) engage clients in digitally and b) codify in a way which doesn’t lead to lots of rejections by the system.

  2. I tend to agree with Billy Burrows.
    Then there is the issue of how do clients using either of the services mentioned decide on the investment funds in which to place their contributions? Does either service take the risk profile assigned to the client by their adviser and match it to a selected panel of funds, or do they ask the client to complete a risk profile independently of whatever they may have completed with the adviser?
    It seems to me that these are robo-execution offerings, not robo-advice!

  3. […] Advisers can cash in on new robo-advice options […]

  4. Risk profilers and Robo-advice are all and well and good… until investment values fall and then the questions start!

  5. With AccessAdvice, we’ve automated the risk profiling process, so the recommendation is based on the responses the client provides as part of their online journey. You’re able to check the advice before any transactions occur.

    Joshua Knight

  6. The use of the phrase robo-advice is confusing the issue as much of what is currently happening in the area is not about providing advice, but about selling new business.

    In Exaxe, we feel that advice should be holistic and therefore we have developed an automated advice system that recommends and can process changes to existing products when appropriate, rather than just focusing on selling new business.

    We see the evolution of automated advice as a way for advisers to provide a full service to a wider client base and to solve the key conundrum of the financial advice sector; lower and middle earners by definition need high-growth products to make the most of their savings. This group can’t afford traditional financial advice yet can’t afford not to get advice, as their fluency with financial products is generally low. Only a widespread use of automated advice solutions can square this circle.

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