The role of the adviser will not be ‘usurped’ by robo-advice any time soon as the technology is not able to deal with real life cases, a trade body chief has said, as he urged advisers to learn how to make the most of the client data they hold.
Speaking at the Financial Services Expo in Manchester on Wednesday (May 15), the Association of Mortgage Intermediaries chief executive Robert Sinclair said he thought true robo mortgage advice was "not coming in [my] lifetime", even though the regulator is keen for innovation in this space.
Mr Sinclair outlined how even the largest ‘robo-advisers’ had needed to change their structures to incorporate human advisers into their system.
He said: "Even the emerging firms – the likes of Habito and Trussle – have had to employ a lot of advisers to go out and do the job — to write the algorithm that does what [advisers] do and to automate it is too difficult with the thousands of products, criteria, and the different nature of most of the customers that talk to you.
"All these complex income streams, complex structures and family lives, plus the cost of putting this together, make it almost impossible."
Only yesterday (May 16), Investec announced it had decided to close its investment robo-advice business following two years of losses.
Simon Bussy, a consultant at Altus who works with robo-advice firms, has long been skeptical of the viability of robo-advice businesses.
Last December Mr Bussy told FTAdvisermany robo-advisers were spending too much money on acquiring new customers to have a viable business model, and the advertising strategies they have used have been ineffective.
But chief strategy officer at Habito, Martijn Van Der Heijden, said that fully automated mortgage advice already existed, proving it was possible.
He said he firmly believed robo-advice could get more accurate results that are less prone to bias than human advisers but the firm's experience showed people wanted both the speed, accuracy and thoroughness of technology married with the expertise, customer service and empathy of a mortgage broker.
He said: "At Habito, we use a proprietary sourcing algorithm to search the whole of the market every time - that's 20,000 mortgages from 90 lenders in seconds.
"The idea that a single broker could do all that, with added complex income streams or other complicated real-life situations, and recommend the best product for a homeowner is quite surprising - because it doesn't happen like that now."
Ishaan Malhi, chief executive and founder of Trussle, said although he thought true-robo advice would gain momentum, he agreed with Mr Sinclair that for now, advisers would still be needed for more complex and specialist cases.
He said: "To overcome this, lenders need to become more transparent with their criteria and pricing, this will make mortgages fairer for everyone.
"Open banking will also overcome this by reducing the administrative burden. With less admin and fewer documents needed, this will help us towards automating the mortgage journey, taking the hassle out for customers completely."
Mr Sinclair said advisers should learn how they can use client data to their advantage.