Automated Advice  

How tech can help close the advice gap

This article is part of
Guide to making Project Innovate work for you

He comments: "The key challenge for firms operating in this space is to ensure they understand the regulatory implications of their model, rather than the development of technological processes."

EY's report, Managing Risk In Automated Advice, agrees the FCA's case-based approach under Project Innovate aims to benefit the consumer, whatever the final technological development might be. It states: "The FCA is looking for companies to work consistently to ensure the customer gets a good outcome over time."

Whether or not a firm goes full-robo, there are important developments and engines that will make the entire advice journey much easier for clients, according to the EY report. It outlines several key components that will be required for a firm to make a successful technological transition.

In a nutshell, these are: 

  • Automating the customer journey.
  • Creating a suitable investment engine.
  • Creating a holistic advice engine.
  • Implementing a compliance engine to minimise the risk of repeatable errors.
  • Creating a satisfaction analytics engine towards managing for good long-term consumer outcomes.
  • Creating a role for a human adviser for the most complex cases.

Moreover, EY says simply implementing automated advice is not the whole answer: "We believe a hybrid approach of humans working alongside fully automated customer journeys will be a key element of successful solutions for the forseeable future."

There will always be circumstances or considerations that cannot be captured by an automated model, which is why some firms, such as Learnvest in the US, offer a 24/7 email contact offering, while Australia's Movo offers tiered packages tied to different levels of human involvement.

Better processes

And while entrepreneurial start-ups in the fintech space are looking at what might be the next generation of technological innovation, financial advisers are concerned with getting good technology now to help make the whole advice process easier, cleaner and more efficient.

Martin Bamford, chartered financial planner for Surrey-based Informed Choice, comments: "We need systems which help to do the ‘heavy lifting’ faced by advisers around analysis and the construction of advice, so that advisers can continue to manage client relationships just in a more efficient manner, would be very welcome.

"This would allow advisers to look after a greater number of clients or work with lower net worth clients, without the cost of their services being an unnecessary barrier to advice."

Echoing this view is Charles Owen, founder of online alternative investment platform CoInvestor, who says: "Technology can support financial planners better by providing wider access to their clients' portfolios.

"Upcoming technology solutions can provide advisers with a 360-degree perspective on their clients' portfolios, enabling them to provide advice that is worth paying for."

Chris Hannant, director-general of the Association of Professional Advisers, agrees: "Any simple back office task that can be automated to make life easier for clients and advisers is worthwhile."