Fund risk-rating and financial planning tools company eValue plans to enter the pensions advice market with a cut-price in-retirement robo-service aimed at those with smaller nest eggs.
Designed to help people who are drawing down their pension to make financial decisions, the service, set for a September launch, will show a spectrum of likely future investment returns depending on how a person invests today.
It will use an economic stochastic model designed by Bruce Moss, director and founder of eValue, and work on probability distribution and how long a person might live.
The planned proposition will be designed to help those in drawdown make decisions on the basis of this modelling at “a fraction of the cost” of traditional advice, according to Mr Moss.
The new service will be available to those already drawing down their pension savings aims to fit a gap in the current robo-advice market, which has focused on accumulation investment.
Most recently, Standard Life and Scottish Widows announced plans to launch robo-advice services, as they target the lower value but mass scale direct-to-consumer market.
Standard Life will be automating parts of its financial planning proposition to offer a direct service to clients, while Scottish Widows has been looking into developing a form of robo-advice.
Adviser view
Scott Gallacher, director at Leicestershire-based Rowley Turton said he was not convinced by robo-advice.
“Even with the at-retirement market, where there are normally fewer other factors to consider such as protection, mortgage, debt repayment, there are still a lot of complex issues,” he said.
He added: “I doubt robo-advice will be able to fully research your existing plans and identify the existence of guaranteed annuity rates, guaranteed fund values or the possibility of higher pre A-Day tax-free cash. Nor, I suspect, will it cover a review of a client’s National Insurance records.
“There is a real danger of people simply selecting the highest initial income without understanding the risks or adequately protecting their spouse and family.”
