If anyone is qualified to draw parallels between automated advice and the early days of internet banking, it is Andrew Firth.
The co-founder and chief executive of “robo-advice platform” Wealth Wizards was one of the team that launched Egg, the UK’s first internet bank, in 1998. So his opinion on the development of all things digital in financial services is not without substance.
“I like being involved in innovative propositions. I had a fantastic experience at Egg; we were genuine pioneers,” he says.
“The industry hasn’t been that innovative in recent years but we are entering a similar period again where it is seen as an important part of it. It’s great, it’s good fun and good for the sector – even if the new thinking is deployed by big brands in the end.”
Firth was involved in Egg prior to its launch, when he worked for the consultancy firm that Prudential had hired to look at the possibility of launching the new bank. He moved across to Prudential and was one of Egg’s first 10 employees.
Egg eventually grew to around 2,000 employees and 3 million customers. But even with that much success, Firth realised the difficulties involved in building a strong challenger brand, particularly once mainstream players piled into internet banking themselves.
“That doesn’t mean to say we didn’t have a have a huge role to play in disrupting the market. But when you’re seen as a success you get absorbed by the incumbents. That’s the way it plays out.”
From farming to finance
Firth started out following his childhood dream of being a farmer.
“I was brought up in the countryside and my grandparents owned a small farm. I studied agricultural economics and started in the industry as a graduate,” he says.
But after a couple of years, when a lot of his friends were heading to London, Firth began to feel that the life of a farmer was not quite adventurous enough for him.
So how did he get into the technology side of financial services?
“I’ve always been interested in financial services and went on a 12-month secondment to US accounting firm Arthur Anderson’s LA office in 1994.
“At that time there was a vibrant start-up culture in California, but start-ups in the UK weren’t seen as a serious career. All the smart graduates went into the big blue chips.”
Firth learned a lot from the launch of Egg and his subsequent role as founder and chief executive of software firm Clearwell, which was sold to The Money Portal in 2006. He moved to The Money Portal as chief operating officer as part of that deal before launching Wealth Wizards in 2009.
“All the smart graduates went into the big blue chips.”
The modern way
Understandably, Wealth Wizards has a very different approach to harnessing the power of new technology compared with Egg. It builds partnerships within the industry, working with pensions consultants and white-labelling services for the big financial services brands, rather than competing with them.
“Wealth Wizards is about advice for ordinary working people. We are on a mission to help people get control of their finances and have some sort of plan.
“The difference between us and other robo-advisers is that we do it through our existing partners and employers. Our technology platform is used by advisers and banks to deliver advice to clients and employees. We are not trying to do it direct to consumer and take on the industry.”
Wealth Wizards was launched when Firth and his founding partners Pete Connell, Ben Webster and Tony Vail were mulling over the 2008/2009 financial crisis. Firth recalls how there were question marks over everything, even the safety of deposit accounts.
“We got together and said to ourselves, there’s got to be a better way. We could see the crisis and the RDR putting advisers out of the industry, and that the advice gap was going to be pretty big, potentially huge. It was intuitive to us that you have to get advice to everyday workers. People who used to get advice from the bank and the man from the Pru.”
Firth and his colleagues saw automation as the way to fill the gap. But the idea of automated advice raised many eyebrows and Firth admits they “felt out in the cold”.
“It’s very easy to wrap this up as ‘man against robot’ but most people realise it’s got to be a hybrid.”
In his view, it took a change in personnel at the FCA, with the appointment of Martin Wheatley as chief executive, for the industry to become less frosty towards robo-advice.
“You could feel a change in the environment from around 2011. In 2009 people were in survival mode, so there was no innovation and no new solutions. People weren’t ready to have the conversation about automation – least of all the regulator. But by 2011 people realised there had to be something different.”
On the issue of how automated advice is perceived by other advisers, Firth is quick to say that it does not have to be expressed as a contest of man against the machine.
“It’s very easy to wrap this up as ‘man against robot’ but most people realise it’s got to be a hybrid of technology and human beings. Smart advisers are recognising that there are not enough of them in the market to service everyone who needs advice and not all people can afford face-to-face financial planning. Some people will still get face-to-face advice but there are partially and fully automated solutions out there.”
He adds that, despite advice increasingly being driven by technology and enabled by it, it is not suddenly going to take over.
“That said, it can make it more scalable, manageable and safer in terms of conduct risk for advisers.”
What’s the best bit of advice you’ve received in your career?
Time is limited so don’t waste it living someone else’s life. That’s a quote from Steve Jobs which resonates for me.
What keeps you awake at night?
My iPhone, much to the consternation of my wife!
What has had the most significant impact on financial advice in the last year?
The launch of LV= Retirement Wizard.
If I was in charge of the FCA for a day I would…
Keep supporting innovation and new propositions. The UK can lead the way.
Any advice for new advisers?
Embrace new technology and work on how to get more productive using new technology.
2009-present: Founder & chief executive, Wealth Wizards
2006-2009: Chief operating officer, The Money Portal
2004-2006: Founder & chief executive, Clearwell
1998-2004: Various roles at Egg, from head of direct marketing to managing director of Egg Investments
1996-1998: Head of change management Prudential Banking
1994-1996: Management consultant, Accenture (formerly Anderson Consulting)
1989-1994: Management consultant, Arthur Anderson Business Consulting
1987-1989: Graduate trainee, Management Development Services