The FCA has launched a dedicated robo-advice unit, as seen in plans first unveiled in the Financial Advice Market Review (Famr). The service has been designed to assist firms looking to offer cheaper, digital alternatives to face-to-face advice.
The regulator has stated that these models must provide a personal recommendation or discretionary investment management service and demonstrate the ability to deliver lower cost advice offering a “genuine consumer benefit”.
Ben Faulkner, marketing director at wealth managers EQ Investors, said that although this could provide a useful tool for firms by encouraging innovation, it has been necessary for the regulator to rectify its own failings.
“It’s worth remembering that we are in a situation where financial advice is only available to the very well-off and the FCA has to shoulder some of the blame for that.
“What we need to see is the Treasury and the FCA working together. A year after the freedoms came into effect work is needed on creating a cost-effective advice market and this is a step in the right direction.”
Aside from the FCA announcement, LV is looking to roll out its robo-advice proposition to those with smaller pension pots.
The service, will provide fully automated advice for £200 and is available to anyone. The insurer has allocated £10m to £15m for investment in its retirement business for technology, new propositions and solutions.
Mr Faulkner added it is difficult to predict the popularity of these services and although the term “advice” is not necessarily being adhered to, positive developments are likely.“Undoubtedly over time propositions will evolve, and levels of trust in these brands will build.”