Where now for hybrid advice models?

Dan Jones

Take robo-advice, which was already struggling to take off in the UK. Standard bearer Nutmeg has invested millions in marketing, but is yet to turn a profit – and it’s far from alone. 

Recent years have also seen wealth managers pull back from robo-advice – UBS doing so in 2018 and Investec following suit last May.

Barclays launched its own automated advice service for customers with £5,000 or more this summer, but other big names have gone quiet on their own plans.

Research published a year ago by the Financial Conduct Authority showing “substantial resistance” to robo-advice, particularly among older generations, was another blow.

There’s still the perception that these models are designed for younger generations, but law firm Linklaters noted earlier this year that many robo-advisers working with the FCA’s advice unit incubator are focused on at-retirement models.

Nonetheless, this year might have given many investors – professional or otherwise – pause for thought.

Those dabbling in robo-advice would have almost certainly felt the absence of a reassuring voice amid March’s market plunge.

On the other hand, advisers’ enforced conversion to a world of Zoom calls and electronic signatures (where available) has accelerated their own digital shifts by several years.

In short, both client and intermediary may well be more inclined to recognise the benefits of a hybrid advice model.

It will take more than a meeting of minds to make such offerings work. There is no shortcut to suitability, and halfway houses often end up satisfying neither party. As others have found out, even if you do have the money to build it, the clients won’t necessarily come.

So this is far from a silver bullet for those advisers who have said they are finding new business much harder to come by amid the pandemic.

Nonetheless, the developments of 2020 will have helped emphasise both the value of advice, and the flexibility with which it can be delivered.

Dan Jones is editor-in-chief of FTAdviser and Financial Adviser