Robo adviser – the on-line challenge. Are you up to it?

Financial Advisory

Financial Advisory



Moderator: Rory Curran, Rory Curran Consulting

Expert: Kevin Russell, SEI 

Key themes 

  • Varying interpretations of what ‘robo advice’ actually means and where it could fit into an advice process.  
  • Robo advice’ as a term is a misnomer. No true end to end automated process exists yet.
  • There are processes where robo technology could play a greater role: workplace (Employee Benefits) and improving client service (Wealth Management).
  • It is also believed that it would play a critical role in simplified financial advice and/or guidance (Advice Gap).
  • For most firms, a hybrid model of technology and human interaction would be relevant. Complex financial planning requires human brain power.

Some concerns re implications for advice models exist, but more see this as an opportunity to extend their engagement model and client value propositions AND to improve the efficiency of their operating model.

Hybrid models likely to do better in short to medium term, particularly where client situations are complex, e.g. in retirement planning – high degree of interest in solutions that make the advice process / back office more efficient, but feeling that this is digitisation/automation, rather than ‘robo’.

There is high interest in robo (automated) advice to improve efficiency and reduce costs but there are a number of obstacles.

  • The technology has to be developed. There is no perceived supplier in the market at this point.
  • Trust in relationship, data security and capability to deliver good outcomes is key to consumer engagement.
  • Regulatory acceptance and framework to incorporate automated advice. For example, regulation currently forces ‘full advice’ rules on simplified/guided advice process. Therefore there’s a need for pragmatism from the regulator (Project Innovate) and a need for challenge from the industry which will take time.
  • There was concern over where responsibility for advice would lie. This would have implications for PI insurance.
  • Adviser culture and adoption/acceptance of technology. This is an age old issue but remains a challenge until the younger, techno-savvy generation takes over.
  • Monetising robo/automated advice is difficult. Clients would be unwilling to pay, so how can advisers justify the cost of the technology?

Whilst the technology might not exist yet, firms expect it to become available in the future and recognise there are steps to prepare for more advanced technology

Client segmentation. Advisers see the importance of detailed research and segmentation focused around behaviours and attitudes rather than traditional metrics (age, income, etc.).

There needs to be a culture and acceptance of technology within progressive adviser firms.

Adviser firms need to have a well thought out technology strategy.

Other observations

Feeling that genuine disruptors have not yet entered the market in the UK, but general feeling that over time this will happen and firms need to be ready/flexible to react/respond to the impacts (high level of interest in emerging models, price points, service scope, etc. – possibly themes for follow-up discussion).

Concerns about the high cost of entry, leading to discussions on affinity, partnership and outsource models which are likely to offer better options for advisers to engage with/deliver solutions for their clients.

From the Nutmeg and Lighthouse experience there are clearly risks and concerns around the commercial viability of current solutions in the market, particularly investing time and development effort/£ in tools that customers use for research but not to purchase. A high % of customer drop out ruins the viability of any business case so this will be a key consideration for future investment decisions.  

Risk/Concern around the creation of systemic issues arising from flawed process design – lots of interesting debate on this point, but clearly something that needs careful consideration as part of any due diligence or solution design.  The extent and quality of systems and controls to deliver good customer outcomes will be another important consideration for future investment decisions.