Financial advisers have criticised the Financial Advice Market Review’s recommendations on how better use of technology, in particular automated services, can improve access to advice.
The FAMR final report, published today (14 March), recommended that the Financial Conduct Authority set up a team to offer support to firms using automated advice and guidance business models.
Andrew Moore, director of Plymouth-based Goodmans Financial Planning, said implementing automated models “misses the point” for making advice more cost-effective, suggesting the report is ignoring demand for financial advice and increasing competition for the DIY market instead.
“I think this review is an embarrassment,” he said, describing the report as “waffle” and out of touch with the actual provision of advice,” Mr Moore said.
“It makes no recommendations whatsoever for something that would increase the supply of advice.”
“It’s a hideously expensive process trying to get a trainee adviser to understand all of the regulation and technical product-based information; surely there should have been some recommendations in this review to help firms take on trainee advisers?”
Adam Carolan, chartered financial planner at Lymm-based Xentum, said there is “no real information” in the report. His firm developed its own technology-based advice system, and he said it’s not the regulator’s job to help firms develop automated models.
“The FCA just needs to get out the way and let innovation happen, as innovation will lead the way anyway, like it does in all industries and sectors.
“We have not seen what a good robo-adviser is yet,” he said, suggesting the regulator just needs to ensure whatever comes into the market is fit for purpose.
“People often overlook that advisers want automated models as well - we want a slick system to give to our clients.”
The FAMR report suggested not everyone wants or needs a personal recommendation for every decision, which some advisers have suggested could be dangerous.
Alan Mellor, managing director of Neston-based Phillip Bates & Co Financial Services, said the FCA’s intervention is for the big players like banks and investment managers.
“Automated advice is hugely expensive to kick-off and the big boys are the ones who will benefit from that if it can be made to work.
“The thing for our industry is how we can demonstrate the difference between guidance and advice.
“To get to the stage of knowing what you should do, rather than what you could do, it’s important to take account of your circumstances, and there aren’t really any shortcuts to understanding a consumer’s position properly.”
Yvonne Goodwin, at Leeds-based Yvonne Goodwin Wealth Management, said her firm has no plans to install an automated model into their business, arguing there is still the demand for traditional face-to-face advice.
“There are so many ways that matters regarding advice can go wrong and they still need a human being to sort it out - that is the problem.”
However, she said the regulator could help develop a framework for firms to help test automated models in a safe area, and suggested those businesses building new robo-advice models need to have operators online to assist consumers.
Alastair Rush, founder of robo-advice service Fiver a Day, said: “The report is a huge validation, maybe not of the value of robo advice, but certainly of the need for the facilitation of more advice which robo advice can provide.
He said FAMR is a “massive step forward” for a new means of delivering simple, clear and safe financial advice.
However Mr Rush said it is vital that human input is not eradicated completely and robo-advice always offers some form of handholding.
katherine.denham@ft.com
