You could view the news that the average robo-adviser is set to charge between 0.25 per cent and 0.5 per cent a few ways.
One way to view EY’s survey of robo-adviser charges is through fearful fingers outstretched in front of your face - those robo-advisers are going to charge less than half of what a typical human adviser charges for advice.
The typical flesh and blood adviser charged 1 per cent on average in 2016, according to a survey by business consultancy Harrison Spence.
Another way to look at it is – what excellent value you human advisers are able to offer for just 0.5 per cent more than a load of data processors, algorithms and electronic decision trees.
A robo-adviser won’t hold a client’s hand if they weep because a loved one has passed away suddenly leaving them an inheritance and they are unsure what to do with it.
A robo-adviser – or at least the product decision tree type ones I have seen - won’t figure out the maze of the latest government’s tax announcements.
A robo-adviser won’t work out whether you would be better off maximising your pension annual allowance, making a gift to your dependants or back a VCT.
A robo-adviser can’t look a client in the eye and see that despite the fact they say they are happy to take risks with their cash their attire, home and outgoings clearly show they clearly can’t afford to lose a penny.
I’ve said it before, and given these two surveys showing the difference in price tags, it is time to say it again.
It is a shame advisers can’t advertise their services in the same way car manufacturers do.
I don’t think robo will kill the human adviser stars amongst you.When it comes to buying a car do you buy the cheapest or pay more for the vehicle that is most capable of consistently transporting you to where you need to get to, won’t crumple and kill you in a crash and won’t consistently break down?
If you have no money, you pay for the cheapest thing with four wheels and an engine in the hope it can at least get you from A to B.
If you have half a brain and a few more pounds in the bank then you opt for the best road worthy car you can purchase. It would be madness not to.
When it comes to money – which makes the world go around – 0.5 per cent isn’t a lot more to pay for a human being capable to making sense of tax, estate planning and able to pull on their vast knowledge to make sure wealth lasts a life.
So despite EY’s robo-adviser report claiming 2017 is going to be the year of automated advice, I don’t think robo will kill the human adviser stars amongst you.
A robo-adviser is fine for the guy in the street with a small pot to invest.
If you want to make sure your cash lasts you a lifetime though, you would be better off paying that extra 0.5 per cent and speaking to a decent human financial adviser.
emma.hughes@ft.com
