‘With Smartwealth, the advice is constantly revised'

‘With Smartwealth, the advice is constantly revised'

Many companies are getting in on the 'robo' or automated advice act. There are the Nutmegs and Wealth Horizons – start-ups trying to get market share – while some of the bigger players are getting into the market with acquisitions of companies that have already developed their service.

UBS, one of the biggest banks in Europe, is launching its own model in 2017. Called UBS SmartWealth, it is hoping to appeal to a demographic with up to £100,000 to invest, in a move intended to develop a new pipeline of clients who may eventually get richer, and qualify for the bank's more sophisticated wealth management service.

Nick Middleton, whose background is private client work, and Shane Williams, the IT expert, are its co-heads who expect the new service will distinguish itself by being much closer to the original human financial advice experience.

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Mr Williams said: "There's a high level of trust in UBS, and the digital advice service might lead people to put their £15,000 to try it, and then they would bring more assets across if they felt good about the service.

Anyone joining up will go through a series of questions in an interactive – or chat – format, such as how much people earn, how much they spend, how long they want to be invested for so it "should feel more like a conversation with an adviser."

The pair make a very clear point that the service is unlike other Robo-advisers by going deeply into a person's circumstances and stress-testing the answers a client gives.

Mr Middleton said: "It asks about whether you've lost money or what kind of behaviour would you have if you lost money, and it comes up with the most appropriate strategy for the outcome you want to achieve, then you can start to visualise what your financial future will look like.

"Rather than say how risky is this, we will stress-test it – the thought process behind it came from regulated individuals like me and client advisers. We sat down and went through any questions we would want to ask of any client." 

The SmartWealth system will make a recommendation after its assessment of the client, and Mr Middleton said he will initially check 100 per cent of all the recommendations. The service has a team of investment experts to monitor the recommendations on a daily basis to ensure the portfolio is still correct. The system will also be checked by the bank's compliance teams.

Mr Middleton said this marked his service out from other 'simpler' versions. He said: "The discretionary managers in the robo-advice space would assess the level of risk and they give you a portfolio which meets that expectation. Whether that's the right place [longer term] is not tested. If anything went wrong, there would be very little redress."

With Smartwealth, the advice is constantly revised, he said. "We will check whether anything has changed during the course of your life: whether your employment situation has changed or if you invested more money than you said you had to invest, for example. We would retest the suitability, so if you said you had £100,000, but you had £120,000, the advice we gave you might no longer be suitable.