Your IndustryApr 28 2016

Rise of robos for pension advice

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Rise of robos for pension advice

Financial Advice Market Review recommendations made it clear technology would be more than a mere add-on to advice - it would become integral to the delivery of advice.

Moreover, it would ensure costs could be kept low.

Page 39 of the Financial Advice Market Review final report stated: “Technology, including fully automated advice models, has a key role to play in reducing the cost of advice and developing ways to engage consumers.

“Even where consumers continue to seek interaction with an adviser, most respondents agreed technology can complement advisers by reducing the time involved in, and therefore the costs of, the advice process.”

A spokesman for consultancy AKG says key industry stakeholders will need to continue to create cost efficiencies to “deliver stable and profitable businesses” in an ever-changing advice market.

He says: “Further investment in technology and better digital capability will be vital to achieve these goals. From a provider perspective, tech can facilitate better service to customers and from an adviser business perspective it should enable more advisers to work with a broader church of customers, and in different ways.”

The FAMR report pledged regulatory support for helping firms to develop tech-based solutions for delivering “high quality advice”, and to do this, the Financial Conduct Authority will set up a team called an ‘advice unit’, which will be part of the regulator’s Project Innovate.

What is Project Innovate?

In 2014, the then chief executive of the FCA, Martin Wheatley, introduced Project Innovate as a way to get the industry engaged with technology.

At the time, he said: “A key objective of the programme is to make sure positive developments are supported by the regulatory environment. We want an FCA that creates room for the brightest and most innovative companies to enter the sector.”

The Innovation Hub was set up shortly afterwards, which is an FCA department set up to encourage innovation in the financial services sector.

In its first year it helped 175 firms.

A spokesman for the FCA says: “Through our Innovation Hub we want new and established businesses - both regulated and non-regulated - to be able to introduce innovative financial products and services to the market.

“Last year we also issued guidance that helps to clarify the different types of retail investment sales models, the boundaries between them and the associated regulatory requirements.”

According to Laurence Baxter, head of policy and research at the CII: “As with so many other things, technology has tremendous potential to make advice and guidance services more accessible, meaningful and understandable to consumers.

“Technology could also help consumers who lack the time or the will to go down the traditional face-to-face advice route. There are certainly well known examples of services already on offer by providers and advisers.”

Mike O’Brien, group brands director for Tenet, is clear technology is “important” and while it will not do away with face-to-face advice, it will become integral.

He says: “It will not replace advisers for complex needs, but may complement their existing proposition.”

For Liz Coyle, compliance policy manager for the SimplyBiz group, the main point is using technology as a means, not an end: “Technology will also provide the means for advisers to deliver more personal and specific advice with the potential to reduce their costs by using systems and platforms.

“These services can be automated so advisers can focus on the activity that provides the most value - specific and personal advice - taking into account all the complexities of the individual.”

Indeed, consumers are already turning to technology for their basic financial requirements, as Nick Eatock, executive chairman of Intelliflo, explains: “The ability to engage with advice through a variety of channels is fast becoming the norm.

“While simplified advice channels are in their infancy, it is clear the demand both from consumers and advisers is increasing.

It will not replace advisers for complex needs, but may complement their existing proposition Mike O’Brien, Tenet

“Some advisers see these as an extension of their advised propositions; others as a way to increase their reach into the mass market, non-advised community.”

Not all experts agree with putting too much emphasis on technology as the panacea to the advice gap.

Stephen Gazard, managing director at Bankhall, says: “Tech is one of the ways forward, but this world is still driven by human contact and relationships.

“Irrespective of what regulators and product providers may think, most financial products are sold to people, rather than them choosing to buy them.

“Financial planning is always a people business, and as such, technology at its best is an aid to that process.”

The spokesman for AKG agrees: “The crucial caveat remains technology alone will not conquer all. Good people and processes need to work hand in hand with the tech to ensure its power as an enabler and facilitator is realised.”