Octopus’s newly launched advice offering is to focus on using technology to improve the level of service offered to clients, not beating others on fees, the investment firm has said.
Simon Rogerson, chief executive of the business, said he appreciated the need to be competitive on price, but Octopus had made the decision to focus on tech to help the "younger affluent" part of the market it is targeting.
The advice will be restricted, rather than independent.
The venture has fifteen employees at present, two of whom are advisers, but hopes to have five advisers and 200 clients within two years. It currently has a "small number" of clients.
He said: "We recognise the impact of technology on advice, we have worked with advisers for 20 years, and have listened to what they say.
"My view is that robo-advice doesn’t work because, while it uses technology, it doesn’t have the empathy, the human understanding that is actually very important to what advisers do.
"We are targeting the nine out of ten people in the UK that don’t have an adviser and need advice. We think being fully transparent on price, showing absolutely everything the client pays, is very important."
He added he hoped the technology the firm is developing, a lot of which isn’t finished yet, would eventually be bought by advisers for use in their own firms.
Octopus also runs a fund management business, but Mr Rogerson said the advice push was not to create distribution for the investment products.
He said: "I reckon the tax efficient product we run might be about 2 per cent of the portfolios of the advice business, because that would be appropriate, the multi-manager business we run would be core to the portfolios of many of the advised clients, because it is designed to be a core holding."
He said there won’t be "mass marketing" for the new venture and he hopes the clients the business wins come largely from referrals.