Richard Anderson, head of pensions policy at Lloyds Bank Private Banking, said he needs to see how the market evolves but reckons the Financial Advice Market Review will produce a better solution than robo-advice for bridging the advice gap.
In the latest FTAdviser video interview, Mr Anderson talks about insistent clients, robo-advice and whether pension freedom advice today could result in mis-selling claims in the future.
He said robo-advice could be part of the solution to the demand for advice on at-retirement options.
Mr Anderson said: “For simple investment solutions, for instance, it is a great solution for customers to think about and at certain points where customers just want to invest more money it is a great solution.
“At moments of truth though - when you come to that real impact that you are just about to retire, inherited some money, my partner has died, I am getting divorced, I am changing job – that is when face-to-face advice can really help.
“I think they (robo-advice and face-to-face advice) can absolutely co-exist. When we look at models robo means lots of other things. It might just be a simple, execution-only, computer-only solution.
“There is a middle alternative, which is computer plus a web chat or telephone support. The third one is an adviser sitting alongside a really slick process. It will be interesting to see which of those models wins.
“I am not entirely sure that pure digital will be suitable for everybody. I think it will depend on customer circumstances.”
Speaking to FTAdviser’s Emma Ann Hughes, Mr Anderson said there was a real risk that pension freedom could result in a spike in mis-selling claims.
Mr Anderson said: “It has the potential, with hindsight risk, to be mis-selling.
“With perfect 20/20 hindsight customers could well look back and say there were better options that I didn’t consider or that I could have done better by doing something else.
“When you look at markets like Australia where 25 per cent of the people who access a pension pot at 55 are running out of money at 70 you can see there is potential to look back and say ‘Nobody warned me that I spend too much money.’
“People really underestimate longevity. So, for example, a couple who get to 65 today have got a pretty good chance that they will live to 85. 50 per cent of them will both live to 85. There is a 25 per cent chance of survival to 100.
Longevity can make a big difference in terms of how you use your money.
