Although it has been just over two years since the UK financial services market began to discuss robo-advice with any seriousness, the term has fast become part of our shared vernacular.
Initially, the idea seemed crazy: was an army of cyber-advisers about to swoop in and pick off the UK’s first-time buyers and retirees? Would this (once again) be the end of advice as we knew it? The simple answer, of course, was no.
The first wave of robo-advice solutions has provided a much clearer picture of the scope of these services, the ways in which advisers can utilise them, and what exactly will prove to be of value to clients.
Research has continually shown that time spent face-to-face with a professional is the element of the advice process most valued by clients.
The reasons for this are obvious. Ensuring a client’s financial wellbeing is important, as is providing them with a solution that meets their objectives.
A virtual process of fact-finding followed by the calculation of a series of algorithms is never going to advance to the stage it can replace the human touch of an adviser.
In this bizarre quasi-era of “post-truth”, in which we have heard from high-profile commentators that people no longer require facts or experts to make important decisions, it is a relief to see the information and expertise available from advisers continues to be a priority for clients.
Discussing one’s personal situation can be embarrassing, painful or frightening. Working with an adviser with whom there is a relationship based on trust and honesty will create a picture of the client’s financial situation and needs, taking every element of their circumstances into account in a way one transactional encounter simply cannot.
You might assume I am not a fan of the recent technological advances in the sector. In actual fact, however, the arrival and evolution of this type of digital support is one of the most positive developments for advisers in years.
Since commission was replaced with fees back in 2013, advisers have wrestled with the dichotomy of acknowledging the importance of advice while also running a profitable business.
Often, potential clients who want and need advice may not yet be in a position to be able to pay fees or a retainer. Robo-advice can offer a solution for those who fall into this category.
When we talk about bringing new blood into the sector, it is generally in reference to how we tackle the decreasing number of advisers operating. But we also need to ensure there are sufficient numbers of clients who recognise and welcome the value of working with an adviser.
By offering digital support options online, advisers can ensure their clients are kept financially informed and healthy until the time comes for them to take on a more personal service.
In addition, such solutions can save advisers a huge amount of time. Used properly, the systems can handle a great deal of the fact-finding and product research process currently undertaken to ensure they are providing guidance on suitable products from across the market.
Meanwhile, the time they have freed up can be spent on the elements of the advice process really valued by clients; elements which can never be usurped by technology, no matter how advanced.
It is true robo-advice could be revolutionary for the future of the sector but its real value will only be harnessed when it is viewed as a way of introducing further efficiencies, saving both time and money within firms – not replacing them.
Matt Timmins is joint managing director of the SimplyBiz Group