His comments come less than a month after he was named as one of the FCA’s expert panel for the Financial Advice Market Review, which has put robo-advice firmly on the menu of options being considered to plug the advice gap.
In the cover story of Money Management’s November issue, Mr Hungerford said online companies in the UK were so far only doing the investment management. “We are not yet doing the advice side. Obviously we have applied for a licence at Nutmeg but that hasn’t yet been granted so it will help when that happens,” he added.
Mr Hungerford claims that, once granted permission, Nutmeg should be the first to offer online advice in the UK.
The advice will involve helping clients with day-to-day investment decisions and thus Nutmeg has been hiring advisers to join the team. These advisers will be like research agents and will also be available to meet customers if they wish.
The robo-advice market is becoming more popular day by day. Money Management’s feature states the total global assets administered by robo-adviser will grow to £168bn by the year 2020, according to financial research firm MyPrivateBanking.
This is still a very small figure when compared with the assets managed by traditional financial advisers, which totalled £40.7tn, as of March 2015.
The market is more established in the US. As of December 2014, robo-advisers there managed about $19bn (£12bn), according to Corporate Insight, a financial services research firm. This represented a 21 per cent increase in assets under management since July that year, and a 65 per cent increase since April.
So how do these platforms work? On a very basic level, a robo-advice platform works very similarly to the way a traditional financial adviser works. “The questions we ask are exactly the same questions a traditional private bank or a wealth manager would ask,” says Nick Hungerford, CEO of Nutmeg. “There is absolutely no difference. The difference is that we ask them online versus on a face-to-face basis and I think that is really important because it is statistically true that most people are less likely to be scared or give answers that they think people want to hear when they are online.”