Not everyone has complex circumstances however, when they do, Mr Eatock says an automated advice process should be able to guide them to specialist human advice.
Paul Resnik, director of investment suitability experts FinaMetrica, says robo-advice does not work well in complex situations.
He says robos work very well where the investor’s situation is not complex and a person neatly fits into one of several predetermined categories.
For example, Mr Resnik says people in their 30s and 40s who are starting to save serious money toward retirement are perfect for robos.
He says: “They are reasonably homogenous as a group – the main differences between individuals derive from their risk tolerance profile.
“And, having grown up with technology, this group is more likely to adopt web based advice. This group are likely to be the first target market for most robos.
“Currently, we are working with robo-advice version 1.0. It works on narrow, niche sectors. It can’t deal with complexity. But that is changing very quickly.
“In the US we are starting to hear about robo-advice 2.0 – it is much more able to deal with complexities when they arise. That’s a real game changer.
“Soon there will be many ‘specialist’ robos, just as there are specialist doctors. Planning a retirement income? There will be a robo that specialises in that. Want an aggressive equity exposure? There will be a robo that specialises in that. And so on.
“Robos will not remain generic. Once they specialise they will have applications throughout every level of the industry.”
Fully automated advice has enjoyed considerable success in US corporate pension schemes where the boundaries for advice are focused, says Ben Goss, co-founder and chief executive of Distribution Technology.
Robo-advice has taken off for US corporate pension schemes because when advice is solely on a pension, Mr Goss says decisions are simpler (how much should I save, into which funds?) and the scheme member pretty much has to make a decision.
Interestingly Mr Goss says the most successful services are often delivered via a telephone based adviser, even though the advice itself is automated.
Over the last few years, he says it has gained limited popularity in the retail market although the most successful propositions have been delivered in conjunction with financial planners.
Mr Goss says the issue in the UK is the level of consumer interest, trust and capability outside of self-directed individuals is very low and the retail market is highly regulated.
There are also concerns around the use of focused advice processes by firms used to delivering more holistic advice.
That said, Mr Goss says digitally enabled propositions are very good at delivering part or all of simpler processes; for financial services this could be Isa advice, advice within a pension scheme or customers with simpler needs around saving, investing and protection.
Here Mr Goss says asset and risk modelling plays a central role in suitability rather than trying to optimise across different product wrappers or financial needs, which while possible requires significantly more trust and time from the consumer and has to address wider regulatory requirements (e.g. broader know your client standards) to ensure suitability.
